The Federal Trade Commission at 100: 

Into Our 2nd Century 

The Continuing Pursuit of Better Practices 

January 2009 

A Report by Federal Trade Commission Chairman William E. Kovacic 

This Report represents the views of FTC Chairman Kovacic and does not necessarily 

represent the views of the Commission or any individual Commissioner. 
ACKNOWLEDGMENTS

I would like to acknowledge the invaluable help of the several members of the 

FTC staff for this project. First, I sincerely thank Maureen Ohlhausen, who took the lead 

on this project from beginning to end. I also thank Greg Luib, James Cooper, Gus 

Chiarello, Paul Pautler, and Maria Coppola Tineo for their superb drafting work. Alden 

Abbott, Andrew Heimert, Stacy Feuer, Yael Weinman, and Carol Jennings also made 

significant contributions to this project. 

The following FTC staff members also helped bring this project to fruition: Hui 

Ling Goh, Dina Kallay, Russ Damtoft, Michael Shore, Richard McKewen, Hugh 

Stevenson, Elizabeth Kraus, John Parisi, Pablo Zylberglait, Deirdre Shanahan, Deon 

Woods-Bell, and Cynthia Lagdameo in the Office of International Affairs; Eileen 

Harrington, Lois Greisman, Betsy Broder, Callie Ward, Deborah Clark, and Erin Malick 

in the Bureau of Consumer Protection; David Wales and Ken Glazer in the Bureau of 

Competition; Dennis Murphy in the Bureau of Economics; Jeanne Bumpus in the Office 

of Congressional Relations; Steve Baker in the Midwest Regional Office; Len Gordon in 

the Northeast Regional Office; Chris Grengs in the Office of Policy Planning; and 

paralegals Jessica Chen, Andrew Hasty, Sage Graham, Rajan Trehan, and Vishwa 

Banker. 

I also greatly appreciate the work of Henry Butler, Andreas Reindl, and Michael 

Salinger in coordinating and participating in our roundtables in Chicago, New York, and 

Boston, respectively. I also thank all of the people who participated in our roundtables 

and external consultations. A complete list of roundtable participants appears in 

Appendix 1, and Appendix 2 lists the agencies, organizations, and individuals 

participating in the external consultations. 

Finally, thank you to our counterparts around the world, from governmental 

ministries, consumer protection agencies, competition authorities, privacy authorities, 

criminal enforcement agencies, sectoral regulators, and international organizations, who 

shared with us the many innovations and ideas that they are using to protect consumers 

and promote competition, and who used their comparative knowledge to provide key 

assessments of the FTC’s international role and operations. 

FTC Chairman William E. Kovacic 
TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................................................................. i

PART 1: INTRODUCTION BY CHAIRMAN KOVACIC .............................................. 1

PART 2: INSTITUTIONAL FOUNDATIONS OF SUCCESSFUL

 FTC PERFORMANCE .................................................................................. 10

I. Agency Mission ............................................................................................. 11

A. Clearly Articulating the Mission ........................................................ 12

B. Measuring Outcomes Rather than Outputs ........................................ 16

C. Internal and External Support for the Mission ................................... 19

II. Agency Structure .......................................................................................... 24

A. Current Agency Design ...................................................................... 24

B. Looking Ahead: Significant Issues Involving the FTC’s 

 Structure and Operations .................................................................... 32

III. Agency Resources ......................................................................................... 46

A. Personnel ............................................................................................ 46

B. Capital Resources ............................................................................... 49

C. Information ......................................................................................... 51

IV. The Agency’s Relationships ........................................................................ 58

A. Congress ............................................................................................. 59

B. Other Federal Agencies ...................................................................... 60

C. State Agencies .................................................................................... 65

D. Foreign Enforcement Agencies .......................................................... 68

E. Consumers and Consumer Groups ..................................................... 72

F. Market Participants ............................................................................ 76

G. Academia ........................................................................................... 77

V. Agency Leadership, Strategic Planning, and Policy R&D ....................... 81

A. Leadership .......................................................................................... 81

B. Strategic Planning .............................................................................. 83

C. Policy Research and Development .................................................... 91
VI. Deployment of Agency Resources ............................................................... 110

A. General Issues Involving Resource Allocation .................................. 110

B. The FTC’s Many Resource Deployment Options .............................. 112

1. Law Enforcement/Litigation .............................................................. 112

2. Policy Research and Development .................................................... 120

3. Advocacy ........................................................................................... 121

4. Rulemaking ........................................................................................ 124

5. Guidelines, Guides, and Advisory Opinions ...................................... 128

6. Consumer and Business Education .................................................... 133

7. Encouragement of Appropriate Industry Self-Regulation ................. 136

8. Partnership and Outreach with Domestic Agencies ........................... 138

9. International Partnerships and Outreach ............................................ 139

10. Other Innovative Approaches to Addressing Specific Problems ....... 141

11. Using Multiple Tools to Address a Problem .............................. 141

PART 3: MEASURING THE EFFECTIVENESS OF FTC ACTIONS ................................ 144

VII. Measuring Agency Effectiveness ................................................................ 144

A. Direct Measurements of Welfare ....................................................... 146

B. Proxies for Direct Welfare Measurements ......................................... 153

C. Responsiveness to Core Constituencies ............................................. 174

PART 4: CHAIRMAN’S RECOMMENDATIONS ........................................................ 178

APPENDIX 1 – LIST OF FTC AT 100 ROUNDTABLE PARTICIPANTS .......................... 184

APPENDIX 2 – LIST OF AGENCIES, ORGANIZATIONS, AND INDIVIDUALS

 PARTICIPATING IN FTC AT 100 EXTERNAL CONSULTATIONS .......... 199
EXECUTIVE SUMMARY

PART 1: INTRODUCTION BY CHAIRMAN KOVACIC

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

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

foresaw for it in 1914? What type of institution should the FTC aspire to be when the 

agency’s second century begins in 2014? 

Over the past seven months, the FTC has conducted a self-assessment to consider 

these and other basic questions about the agency’s future direction. Two aims motivated 

this initiative. The first is to ask what we must do to continue the valuable work that the 

agency performs today and to identify steps we must take to do still better in the future. 

The focus of this exercise is an agency that is one of the great success stories in the 

modern history of public administration. 

The progress of the Federal Trade Commission in its modern era has built heavily 

upon the willingness of its people to assess their work critically and explore possibilities 

for improvement. The FTC at 100 self-assessment is the latest element of that tradition, 

and the exercise has yielded valuable insights about strengthening the agency. Several 

areas stand out. The inquiry has helped identify what resources – personnel, facilities, 

equipment – the FTC will need to perform its duties in the future. Nothing is more vital 

to the success of the Commission than its human capital. A second result is to suggest 

how the FTC might improve its approach for choosing strategies for exercising its 

powers. No task of administration is more important than selecting priorities. A third 

product of this self-assessment has been to identify how the FTC can strengthen its 

processes for implementing its programs. The manner in which an agency organizes its 

operations deeply shapes the quality of its substantive initiatives and affects the costs that 

firms bear in complying with the agency’s commands. Finally, the inquiry has pointed to 

how the FTC can better fulfill its duties by improving links with other government bodies 

and nongovernment organizations. 

 The consultations for this project have identified seven general characteristics of 

good administrative practice that the FTC should strive to achieve in its work in the 

coming years. The successful competition agency of the future is one that: 

• Formulates and clearly communicates well-specified goals to its staff and to 

external constituencies. 

• Establishes and refines internal planning mechanisms that devise a strategy and 

programs for accomplishing its goals. 

• Employs a problem-solving approach that uses the full range of the agency’s 

policy tools to correct apparent market or government failures that impede the 

attainment of competition and consumer protection objectives. 

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• Creates internal quality control systems that test the soundness of proposed 

initiatives. 

• Emphasizes the recruitment and retention of skilled administrative staff, 

attorneys, and economists. 

• Makes regular, substantial capital investments in building knowledge, in 

developing relationships with collateral public agencies and academic research 

centers at home and abroad, and in improving physical infrastructure assets. 

• Establishes processes for the routine evaluation of programs, agency organization, 

and procedures. 

In these and related measures, the FTC will prosper if it embraces an ethic of continuous 

self-assessment and improvement. 

PART 2: INSTITUTIONAL FOUNDATIONS OF SUCCESSFUL FTC PERFORMANCE

 This self-study dwelled extensively on the basic question of what criteria serve to 

separate good performance from adequate or weak performance. The definition of 

standards is fundamental to the study of the performance of the Commission or any other 

public body, yet the need clearly to specify criteria frequently gets less attention than it 

deserves. One of the central aims of this self-study was to identify institutional features 

that beget good substantive outcomes over time. 

I. Agency Mission 

A. Clearly Articulating the Mission 

A fundamental characteristic of a good institution is the clarity with which it 

understands its purpose and defines its “mission.” The FTC’s mission has two 

dimensions: one related to the substance of policy and the other related to the process by 

which policy is formed. The substantive dimension consists of the public policy goals 

that the Commission should accomplish on behalf of the American people. The process 

dimension involves the means that Congress placed at the Commission’s disposal to 

address economic policy issues. 

 As a threshold matter, agency leaders must clearly articulate the agency mission 

so that staff and external constituencies have a firm grasp of what the agency is trying to 

achieve. In its most recent strategic plan, the FTC has defined its mission in the 

following manner: “To prevent business practices that are anticompetitive or deceptive 

or unfair to consumers; to enhance informed consumer choice and public understanding 

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of the competitive process; and to accomplish these missions without unduly burdening 

legitimate business activity.”1

There appears to be widespread understanding that the FTC’s current mission 

focuses on consumers and that the improvement of consumer welfare is the proper 

objective of the agency’s competition and consumer protection work. The improvement 

of market outcomes for consumers, and not the status of specific firms or collections of 

enterprises, is seen the reason to challenge fraud, deceit, and related forms of unfair 

practices, and to police anticompetitive mergers and other practices that improperly 

suppress rivalry in the marketplace. This perspective appears to enjoy broad support 

within the community of competition policy and consumer protection agencies. 

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

capabilities Congress has entrusted to it. The FTC’s powers are genuinely 

multidimensional. The Commission best fulfills its destiny when it uses a problemsolving approach that applies the most effective mix of the agency’s portfolio of policy 

instruments, which include law enforcement, administrative adjudication, advocacy, the 

collection of data, the preparation of reports, and rulemaking. A certifying characteristic 

of good performance for the Commission is its demonstrated capacity to employ this full 

panoply of capabilities to address important public policy issues. 

B. Measuring Outcomes Rather than Outputs

In addition to a clearly articulated mission, there should be a close nexus between 

the mission and outcomes for the public that can be measured. That is, a mission ideally 

should be defined in a manner that lends itself to meaningful measurement of whether the 

agency carries it out successfully. In the case of a competition or consumer protection 

agency, it should develop a mission that is focused on outcomes for the public (for 

example, preserving competitive markets or preventing fraud), rather than agency inputs 

or outputs (for example, number of staff employed or cases filed). It is typically easier to 

identify and measure government agencies’ outputs rather than outcomes. Thus, agency 

leaders should articulate a mission that lends itself to developing outputs that enjoy a 

close nexus with desired outcomes. Beyond emphasizing outcomes rather than outputs, a 

mission that focuses on measurable outcomes has several advantages for an agency’s 

pursuit of its goals. 

C. Internal and External Support for the Mission 

Finally, for an agency to thrive, its mission should enjoy support from key 

internal and external constituencies over time. For the FTC, one core constituency is its 

own staff of administrative professionals, attorneys, and economists. The Commission 

derives significant advantages from building widespread internal agreement upon and 

endorsement of its mission. Among other benefits, such support enables managers to 

 

1

 FTC, STRATEGIC PLAN: FISCAL YEARS 2006-2011, at 1 (2006), available at

http://www.ftc.gov/opp/gpra/spfy06fy11.pdf. 

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economize on resources. When the FTC’s staff understands and embraces the agency’s 

stated aims, managers need spend less time to create incentives for staff to pursue the 

mission and can reduce the effort devoted to monitoring whether staff’s efforts are 

consistent with the FTC’s mission. 

Beyond mobilizing its own employees, an agency also must enjoy support for its 

mission among external constituencies. Lack of external support for the mission can 

erode the perceived legitimacy of the agency’s individual actions, cause Congress to 

withdraw part of its jurisdiction, and, in extreme circumstances, call into question its 

continued existence. In addition, although support for a mission is crucial to any agency, 

it is important to distinguish between support for a mission among internal and external 

constituencies over time, on the one hand, and unanimous support for specific agency 

actions, on the other. The former is necessary for a successful agency; the latter is not. 

II. Agency Structure 

The structure of an administrative agency such as the FTC deeply influences the 

skill with which it carries out its responsibilities. The structure and organization of a 

competition and consumer protection agency can affect the performance of its priorities 

directly, for example, by having operational units dedicated to bringing specific types of 

cases or examining individual economic sectors, and indirectly, for example, by 

facilitating communication and coordination among agency components or having 

sufficient flexibility to address changes in rapidly transforming markets. 

Consumer protection and competition agencies around the world have a variety of 

structural designs. Some agencies have only competition or consumer protection 

enforcement authority. Others, like the FTC, combine the functions to meet a broader 

mission of protecting the marketplace for consumers. Among agencies with both 

functions, some organize their work along industry lines, while others divide along 

competition and consumer protection lines. Some agencies have a single commissioner 

or director, while others are led by a collegial body. 

 A. Current Agency Design 

 

 Since the early 1970s, the FTC has had a bureau structure that includes the 

Bureau of Competition (“BC”), Bureau of Consumer Protection (“BCP”), and Bureau of 

Economics (“BE”). On the whole, the FTC’s structure of operating units has worked 

well. External consultations revealed many instances in which other countries have 

emulated major elements of this structure. Further, the FTC’s administrative structure 

and its organization of bureaus have proven to be highly adaptable and flexible. New 

divisions or other subunits can be, and have been, created in response to changes in 

marketplace conditions or perceived agency needs. 

Consider two examples of how the agency has, in recent years, altered its 

structure to better address its mission. In 2007, the agency altered BCP to form the 

Division of Privacy and Identity Protection out of the Division of Financial Practices, 

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which has enabled the FTC to better address consumer-related financial-privacy 

concerns, while also improving the focus on the other issues that remained in the 

Division of Financial Practices. In 2008, the Bureau of Economics developed a research 

unit to oversee BE research that will have impacts across all areas of enforcement. 

B. Looking Ahead: Significant Issues Involving the FTC’s Structure and 

Operations 

The FTC’s self-study consultations demonstrated that organizational adaptability 

and an ethic of continuous institutional improvement are major characteristics of good 

agency performance. Several structural attributes of the FTC affect its success. One 

involves the integration of competition and consumer protection missions within a single 

agency. A related issue, which the dual mission especially implicates, is communication 

and coordination across agency components. This is particularly important for the 

nonenforcement activities of the agency, which can be effective tools to shape policies 

across practice disciplines. Another structural issue is the placement of economists 

within the agency. A further significant structural issue is the proper role of 

administrative adjudication in the agency. 

Shared authority is a common condition of the FTC’s competition and consumer 

protection missions. There are other federal agencies that address aspects of these 

missions, such as the Department of Justice (“DOJ”), the Food and Drug Administration, 

and the Federal Reserve Board. However, the dual missions that fall under the “unfair or 

deceptive acts or practices” and “unfair methods of competition” standards within the 

FTC Act make this agency particularly well suited to address the interplay between 

consumer protection and competition. The Commission’s capacity to meld expertise in 

economics, competition, and consumer protection is a conscious element of its 

institutional design and a major reason for its existence. 

 

A longstanding concern of students of public administration is the skill with 

which the individual components of an institution share information with each other and 

otherwise coordinate their activities. The need to achieve effective intra-agency 

information flows and cooperation is a matter of particular importance for the FTC. 

Among other reasons, this is a function of the Commission’s dual-purpose mission and its 

portfolio of research capabilities and other policy instruments that may be used by 

multiple agency units. Whether the agency is consistent in communicating the central 

tenets of the competition and consumer protection missions to agency staff and to outside 

stakeholders is an indicator of its likely success in achieving its mission. 

 Panelists and other commentators discussed ways to integrate the agency’s 

disciplines by means of nonenforcement resources. Panelists and commentators have 

observed that the FTC can improve its performance by building stronger links among the 

bureaus and other offices, such as between competition and consumer protection staff, as 

well as by more completely integrating economists in all aspects of the agency’s work.2

 

 

2

 Competition agencies routinely include economists on their staffs, and there are different ways to 

incorporate economists’ input into agency decision making. Until recently, the FTC’s Bureau of 

v
Some panelists suggested that a policy office could play a useful role in improving these 

links and disseminating important insights throughout the agency. 

Finally, under Section 5(b) of the FTC Act, the Commission may challenge unfair 

or deceptive acts or practices or unfair methods of competition through administrative 

adjudication. Roundtable panelists shared a variety of opinions about the administrative 

adjudicatory process, and many suggested modifications to modernize and make the 

system more effective. Former General Counsel Stephen Calkins observed that 

elimination of the administrative adjudication feature would undermine the 

Commission’s special role. Calkins explained: “[O]ne of the alleged comparative 

advantages of the Commission is that it can be an adjudicative body. And I do think that 

it is – it’s important for this agency to get it right, to make it work, because it’s one of the 

reasons we have a Federal Trade Commission.”3 

Other panelists suggested that federal courts are the proper forum for the FTC to 

pursue cases, as the process of having the FTC both issue the complaint and then become 

the appellate tribunal in the outcome creates an appearance problem. Another criticism 

of FTC administrative adjudication involves the time it takes to complete the 

proceedings. Panelists also discussed ALJ expertise in handling the types of 

administrative cases before them.4

 Looking ahead, the agency should determine what 

role Part III adjudication should play in advancing competition and consumer protection 

law enforcement and policy. In particular, the agency should consider when 

administrative adjudication is most appropriate, as well as ways to improve the 

adjudicatory process.5

 Economics had a relatively unique position vis-à-vis economists at many other competition and consumer 

protection agencies in that the BE Director reports directly to the Chairman of the agency and makes 

recommendations directly to the full Commission. As a result, economist input into enforcement and other 

decisions is not merely subsumed into recommendations controlled by attorneys or case handlers, as is the 

case at many other agencies. More recently, a number of competition agencies have been adopting the BE 

organizational model and giving the office of the chief economist a direct reporting line to the agencies’ top 

leadership. 

3

 Calkins, 7/30 DC Tr. at 105-06. Throughout this report, citations to “Tr.” refer to the various FTC at 100 

roundtable transcripts. Participants are identified by last name; roundtables are identified by location. 

The agendas, biographies, transcripts, and other information relating to the FTC at 100 roundtables are 

available on the FTC’s website at http://www.ftc.gov/ftc/workshops/ftc100/index.shtm. In addition, 

Appendix 1 to this report provides the identity and affiliation of the roundtable participants. Appendix 2 

provides a list of the agencies, organizations, and individuals participating in FTC at 100 external 

consultations. 

4

 It bears noting, however, that the ALJ selection process is dictated by government-wide requirements and 

not by FTC rules or policy.

5

 Presently, the rules governing Part III proceedings are in the process of being revised to address concerns 

over the speed of certain types of cases. The proposed revised rules and comments are available at 

http://www.ftc.gov/os/2008/09/P072104nprmpt3.pdf. 

vi
III. Agency Resources 

The FTC’s ability to achieve its mission depends in significant part on its 

allocation and management of personnel, capital, and information resources. 

A. Personnel 

How the FTC approaches recruiting, training, and retention of talented and 

competent personnel bears significantly on the agency’s ultimate success. Given the 

evolution of competition and consumer protection policy, and changes in the tools of 

economic analysis, any agency self-assessment should consider how the agency can 

recruit and retain well-trained personnel in relevant areas of expertise, as well as how the 

agency trains and educates its existing staff to remain current in such areas. External 

consultations yielded several recommendations on how to improve the recruiting, 

training, and retention of skilled professionals at the FTC. For example, to offset the 

government/private sector pay disparity and recruit talented professionals, many panelists 

suggested that the FTC employ a combination of first-rate training and ample 

opportunities for staff to apply their skills and knowledge in interesting and innovative 

legal and policy areas. 

B. Capital Resources 

 In several respects, an agency’s budget dictates the deployment of its resources 

and thus dictates its ability to achieve its mission. A well-planned and effective budget 

policy, including allocations within that budget, is essential for the success of any agency. 

The FTC’s budget must be able to strike a balance that both reflects agency priorities, as 

expressed to staff and external stakeholders, and is sufficiently flexible to respond to 

circumstances that require a shifting of budgetary priorities. For example, allocation of 

BCP resources among the many tools with which it pursues its mission – including 

enforcement actions, rulemaking, consumer and business education, policy R&D efforts, 

and promotion of industry self-regulation – has shifted at different times to meet different 

agency needs. 

C. Information 

The Commission needs information to detect problems, investigate them, and 

then, through litigation or otherwise, address them. The FTC’s effective use of personnel 

and capital resources is largely dependent on the information the agency is able to obtain 

regarding marketplace conduct, mergers and other transactions, and legal, economic, and 

technological developments. 

The agency, through its Consumer Response Center, receives and responds to 

thousands of consumer and business complaints or inquiries each week. Complaints are 

made available to FTC staff and other law enforcement agencies in the U.S. and 

worldwide through the FTC’s Consumer Sentinel Network, a secure online database that 

includes not only complaints received by the FTC, but also by other selected government 

vii
agencies and nongovernmental entities. On the competition side, the agency gathers 

information about transactions and ongoing conduct in the marketplace primarily through 

specific statutory reporting requirements, including those established by the Hart-ScottRodino Act. The FTC also gathers information to detect and investigate possible law 

violations through complaints from, and inquiries directed to, competitors, suppliers, and 

consumers. 

Further, in both the competition and consumer protection areas, the agency gathers 

relevant industry and marketplace information by convening conferences, workshops, and 

hearings to address current and emerging issues in these areas. Such events have become an 

important means through which the Commission and its staff identify problems and develop 

appropriate responses. The agency also obtains information from other competition and 

consumer protection agencies, both foreign and domestic. 

 Of course, like other enforcement agencies, the FTC also has enforcement-related 

authority to issue compulsory process, such as subpoenas and civil investigative 

demands. Apart from a particular investigation, however, the FTC also has unique 

powers to obtain information – in both competition and consumer protection matters – 

pursuant to Section 6(b) of the FTC Act, which enables it to conduct wide-ranging 

economic studies that do not have a specific law enforcement purpose. Whether the FTC 

uses its 6(b) authority in a particular context depends on whether there are important 

policy topics that require investigation that could not be done with publicly available or 

voluntarily submitted data. 

IV. The Agency’s Relationships 

The FTC has important relationships with several types of outside entities. These 

relationships impact the agency’s performance in various ways, and each requires a 

slightly different approach by the FTC to maintain the relationship. Some relationships – 

such as those with Congress, consumers, and industry – involve interaction and 

communication regarding how the agency pursues its mission. Some relationships – such 

as those with domestic and international agencies – involve coordination in law 

enforcement efforts. Some relationships – such as those with domestic and international 

agencies and the academy – involve efforts by the FTC to research, develop, and promote 

sound competition and consumer protection policy. In any case, the FTC can benefit 

from, and improve its effectiveness with, input from each of these stakeholders. 

Congress. As an independent agency created by Congress, the FTC has an 

important relationship with Congress as an institution and with individual members of 

Congress. Primarily through its Office of Congressional Relations, the FTC works 

closely with congressional committees and subcommittees, individual members, and their 

staffs, responding to inquiries regarding competition and consumer protection matters, 

testifying before congressional panels on FTC policies and programs, and preparing 

reports for Congress. 

viii
A number of panelists stressed the importance of the FTC managing carefully its 

relationship with Congress. One way to envision the FTC’s work is that its activities 

involve either accumulating political capital or spending political capital. In choosing 

new programs, the agency must be attentive to the balance of its political capital account. 

An agency that chronically runs major deficits is likely headed for trouble. 

Other Federal Agencies. Due to the wide breadth of the FTC’s activities and 

overlapping jurisdiction in certain substantive areas of the law, the FTC has numerous 

policy and enforcement relationships with other federal government entities, including 

the Department of Justice, the federal banking regulators, the Consumer Product Safety 

Commission, and the United States Postal Inspection Service. For example, relations 

with other federal agencies are important to the FTC’s consumer protection mission 

because of the overlapping jurisdiction that exists in certain areas (for example, the 

shared jurisdiction over consumer credit with the federal banking agencies) and the 

statutory law enforcement relationships in others (for example, the FTC’s dependence on 

the DOJ to pursue civil penalty cases). 

In the competition area, the FTC’s most central interagency relationship on the 

federal level is with the DOJ Antitrust Division. The FTC and DOJ have significant 

overlapping jurisdiction with respect to antitrust enforcement and policy. For example, 

the agencies share antitrust jurisdiction over most mergers and business conduct. Given 

these overlaps, the two agencies have developed premerger and enforcement clearance 

and communication procedures to avoid duplicative enforcement in competition matters. 

For those within the ambit of both the FTC’s and DOJ’s enforcement jurisdictions, 

comity and consistency of views between the agencies is important because it provides 

certainty for consumers and market participants. Also, it can allow the agencies to 

operate more efficiently. Thus, as the FTC works to improve its performance, it should 

consider how to improve its relationship with the DOJ to enhance the clarity, 

transparency, and consistency of antitrust enforcement. 

 Through its advocacy program, the FTC advises other federal agencies across a 

wide array of areas, such as food labeling, lending practices, and energy regulation. FTC 

staff also frequently consults informally with other federal agency staff. Through these 

formal and informal consultations, the agency has been able not only to coordinate efforts 

with these agencies but also to influence their work – and secure assistance in the FTC’s 

work – in ways that benefit consumers and competition. 

State Agencies. As with federal agencies, the FTC engages with state enforcers 

and other state institutions to address overlapping issues in competition and consumer 

protection enforcement, as well as policy matters. Comity with state antitrust and 

consumer protection agencies has become increasingly important given state involvement 

in many federal enforcement actions. Today, the FTC often conducts investigations 

jointly with state attorneys general because both have an interest in the particular merger 

or conduct at issue. On broad policy matters, the FTC often advises state legislatures and 

agencies through advocacy filings. 

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International Enforcement Agencies. Building and maintaining strong bilateral 

relationships with foreign agencies is a critical element of the FTC’s programs, including 

its enforcement program. Given the many important FTC cases involving foreign parties, 

foreign-located evidence or assets, or parallel review with other agencies, effective 

cooperation with agencies outside the United Sates is a necessity. Strong personal 

relationships facilitate case cooperation and dialogue, making contact at a personal level 

an important factor in international cooperation. 

The Commission’s engagement with foreign governments on policy matters 

serves to inform the policy of other nations. By describing how the U.S. agencies 

approach various issues, the FTC hopes to provide useful information for other nations to 

consider as they make their own choices regarding market-based or regulation-based 

approaches to policy questions. In addition, given the importance of the exchange of 

ideas and strategies, these interactions with foreign counterparts can inform an agency’s 

domestic agenda and practices. 

Another important way in which the Commission works with foreign counterparts 

is by providing technical assistance to both younger and more mature competition and 

consumer protection agencies. Technical assistance projects and programs can allow an 

agency to improve its relationships with foreign counterparts and provide a significant 

opportunity to engage in the type of export and import activity that promotes cooperation 

and convergence. 

Consumers and Consumer Groups. Consumers are, of course, one of the key 

constituencies for the FTC. How the agency relates to consumers – either directly or 

through various consumer and advocacy groups – is thus a significant factor in the 

agency’s ultimate success. The agency’s direct interactions with consumers are largely 

limited to receiving complaints from consumers and issuing educational materials for use 

by consumers. A significant means for relating to consumers is therefore through 

interactions with various consumer groups. 

Panelists stressed the importance of ensuring that the means by which the FTC 

provides its consumer information remain up-to-date. This means understanding the 

different gradations or demographics of consumers, the information media on which they 

rely, and preparing the FTC message such that it can be understood in the appropriate 

format for the targeted consumer. 

In addition to getting its message out to consumers, the FTC must consider its 

(two-way) interactions with consumers and consumer groups. Panelists discussed how 

greater transparency of agency decision making and the inclusion of interested groups in 

the process would help in making FTC actions more effective. Panelists suggested that 

having liaisons within the agency to facilitate communication with consumer groups and 

industry would be a sensible step toward building relationships with these constituencies. 

Market Participants. Industry stakeholders rely on the FTC for information and 

guidance on competition and consumer protection enforcement, regulation, and policy. 

x
In turn, the agency can benefit in its work from the insight, expertise, and cooperation of 

industry groups. Panelists discussed whether the FTC offers useful guidance, whether it 

gathers industry views and suggestions – for example, through public workshops and 

hearings – and whether it coordinates effectively with industry, where appropriate. 

Academia. Finally, several panelists stressed the importance of reaching out to 

the academic community to spur research in areas of interest to the FTC, which can 

expand the agency’s research resources as well as benefit the participating academics. 

Although outside academics have been useful in certain agency initiatives, panelists 

expressed some concern that FTC issues are either little known or underappreciated by 

the larger academic community. Thus, research and work that is valuable for purposes of 

the agency’s enforcement efforts may not be appreciated by all members of the academic 

research community. 

V. Agency Leadership, Strategic Planning, and Policy R&D 

Agency leadership must motivate the staff to pursue the agency’s mission, both 

by clearly communicating that mission to staff and by listening to staff’s input on how 

best to achieve the mission. Strategic planning allows the agency to identify competition 

and consumer protection problems on the horizon, as well as determine which tool or 

tools with which to address such problems. Policy R&D is a necessary foundation for 

tackling the challenging competition and consumer protection policy issues that the 

agency has been tasked with addressing. The FTC’s efforts in these three areas – 

leadership, planning, and research – significantly impact the agency’s ability to deploy its 

resources in an effective manner. 

A. Leadership 

Effective leadership at the top of the agency sets the tone for how the staff 

executes the agency’s mission. Effective leadership involves not only understanding the 

agency mission, structure, and the interests of key stakeholders, but also communicating 

the mission and priorities to agency staff to motivate them to carry out the mission of the 

agency effectively over time. Agency leadership also affects employee morale, which 

often dictates agency success. 

B. Strategic Planning 

Strategic planning at a government agency involves more than just a 

determination of how insightfully to identify and understand problems that arise, but also 

a determination of how to pick the right tool or right collection of tools (or even the right 

sequencing of tools) to use to address such problems. In the case of the FTC, the agency 

must decide, for example, whether to issue guidelines, bring a case, create rules, or hold 

public consultations to address the various competition and consumer protection 

problems that it faces. 

xi
External consultations confirmed the importance of strategic planning to the 

success of this, or any other, agency. Former Chairman Timothy Muris explained that it 

is insufficient to have a core mission and to define it well; the agency needs a strategy to 

implement it. That strategy requires continual new thinking and innovation.6

 In addition 

to innovation, roundtable panelists identified policy continuity as another important goal 

of strategic planning. Former General Counsel Debra Valentine framed the relevant 

inquiry as follows: “How can you keep an acute sense of the past and the evolving trends 

so that you can try to keep some strategies going through time, notwithstanding the 

inevitable impulse of the next gang to really want to leave their mark?”7 U.K. Office of 

Fair Trading (“OFT”) Chief Executive John Fingleton explained that the governance 

structure of the OFT provides “a certain type of continuity,” as the OFT’s Board is 

responsible for setting long-term strategy for the agency, rather than making individual 

enforcement and policy decisions, which is left to the Executive.8

The goal of policy continuity, however, does not imply inflexibility in strategic 

planning. Several panelists emphasized the importance of building flexibility into any 

strategic planning efforts. The Chairman of the U.K. Competition Commission, Peter 

Freeman, characterized the need for flexibility as follows: “[A]s the Duke of Wellington 

has said, ‘time spent on reconnaissance was seldom wasted.’ Also, I think he said words 

to the effect of ‘all plans collapse on first contact with the enemy.’”9

 Strategic planning, 

Freeman continued, “cannot be too rigid and it cannot be too binding. [B]ut everything 

we do should take place . . . against a background of priorities and policy 

consciousness.”10

The Commission’s strategic planning efforts include specific enforcement and 

policy agendas brought to the agency by Chairmen, Commissioners, and senior staff; the 

strategic planning done pursuant to the Government Performance and Results Act and 

various other reporting requirements; and senior staff retreats that the Commission has 

held for more than a decade. Other examples of strategic planning include “policy 

review sessions,” which were used in the 1970s and 1980s to permit the Commission 

members and staff to discuss significant policy issues. The Commission recently revived 

this custom in 2008 to discuss how the Commission might address various issues 

concerning the financial crisis. 

Recommendations for future FTC strategic planning offered by roundtable 

panelists addressed, among other things, the level at which such planning should take 

place. Former BCP Director Jodie Bernstein recommended that the FTC engage in 

agency-wide – not just bureau-by-bureau – strategic planning because it would 

“energize” both BCP and BC by letting each bureau see what the other’s ideas are. This 

 

6

 Muris, 7/29 DC Tr. at 20-21. 

7

 Valentine, London Tr. at 85. 

8

 Fingleton, London Tr. at 86. 

9

 Freeman, London Tr. at 80. 

10 Id. at 83-84. 

xii
would address the concern Bernstein has with the Balkanization of the agency into 

bureaus or even divisions that do not communicate with each other.11 Further, several 

panelists stressed the importance of including outside entities – including state agencies, 

congressional staff, consumer groups, and industry – in the planning process in order to 

anticipate where the next controversy will be, get relevant information from key 

stakeholders, and gauge how much support the agency will have to take action in a given 

area. 

External consultations revealed several examples of strategic planning undertaken 

at other competition and consumer protection agencies. For example, the U.K. OFT has a 

dedicated “strategy and planning team,” which is engaged in all parts of strategic 

planning development and implementation to help ensure consistency across the agency. 

The European Commission’s Directorate General for Competition implements its 

strategic planning in part through the use of a peer review system designed to foster intraagency debate concerning particular matters. The Canadian Competition Bureau recently 

has engaged in a process that involves an environmental scan – including a review of 

sector and marketplace developments to identify potential problems relevant to each of its 

branches – that feeds directly into the agency’s agenda setting. 

C. Policy Research and Development 

Policy research and development plays an important role at the FTC. An agency 

that intends to be thoughtful and to consider its policy actions seriously must have some 

ability to analyze the trade-offs inherent in any policy choice. That capability can be 

developed through, among other means, academic-style research, information gathering 

and report writing, and conferences and workshops that bring together elements from 

business, government, consumer representatives, and the bar to discuss issues related to 

competition and consumer protection policy and law. 

The FTC has a mandate to undertake certain forms of research based on Section 6 

of the FTC Act and the historical report-writing activity of its predecessor entity, the 

Bureau of Corporations. That mandate differentiates the FTC from most other antitrust 

or consumer protection agencies in the world. From its inception, the FTC carried on a 

general investigative function that complemented its law enforcement activities. The 

results of the investigations were compiled in reports that were intended to shed light on 

various questionable business practices of the day. That activity was the precursor of 

what is now thought of as research and policy R&D at the FTC. 

1. Goals Served by Policy R&D

Apart from the primary purpose of answering specific research questions, the 

FTC, including its several components, undertakes research for a number of reasons. 

Research and policy R&D is undertaken to improve agency decision making in specific 

areas, such as law enforcement, rulemaking, and competition and consumer protection 

 

11 Bernstein, 7/29 DC Tr. at 43. 

xiii
advocacy. Research activities often allow the agency to develop ways to better analyze 

problems that can be used in antitrust or consumer policy settings. Doing such analysis 

in a law enforcement or litigation environment often is difficult or impossible; doing it in 

a research environment is thus necessary. 

Research topics often allow the agency to gain a better understanding of 

industries, including those, such as energy and health care, which feature prominently in 

the agency’s law enforcement agenda. For example, the agency’s gasoline and diesel 

price monitoring project allows the agency to track changes over time in price-cost 

margins and to notice anomalies in prices in various cities or regions. Although checking 

for such anomalies is now routine, this effort initially was a policy R&D project. Other 

R&D projects are designed to gain information about industries that the agency expects 

to be important in its future enforcement and policy efforts. 

Policy R&D efforts at the FTC also serve the important purpose of scanning the 

horizon for future competition and consumer problem areas. The agency gathers relevant 

industry and marketplace information by convening conferences, workshops, and 

hearings to address current and emerging competition and consumer protection issues. 

Such events have become an important means through which the Commission and its 

staff identify problems and develop appropriate responses. 

 2. Setting a Research Agenda 

Given the prominent role of policy research and development at the FTC, having 

a systematic means for identifying and planning relevant research is imperative. 

Historically, ideas for research topics from within the FTC have come from many 

sources. Several studies have been essentially staff-initiated; many have been projects 

promoted by the agency Chairman or the Commission; and others have been sponsored 

by multiple bureaus. It is often difficult to identify a single source of a research idea. 

Often the specific ideas come from staff, but with encouragement from agency leaders 

who may have identified general areas for investigation. Other times, ideas for studies 

follow from previous projects. In other instances, congressional interest, if not a direct 

congressional request, might instigate a study. 

FTC research ideas have come from a variety of sources. During the past few 

years, a large portion of the research work has been generated by presidential or 

congressional requests for examinations of various competition and consumer protection 

issues. Beyond these external requests, much recent FTC research has been initiated or 

developed by the agency’s Chairs, by non-Chairman Commissioners, and, as has been 

true throughout the history of the FTC, by the staff. 

There are several steps in the research process, including defining the broad topic 

areas of interest for research, generating interesting, policy-relevant, and achievable ideas 

within a topic area, and producing and monitoring the research. In the recent past, these 

tasks largely have been handled within each economic or legal organization within the 

agency. In principle, these tasks could be accomplished either in such a decentralized 

xiv
manner or through a more systematic, centralized process involving the simultaneous 

collection of research ideas from multiple sources, coordination of topic choices, and then 

monitoring of output. 

Some roundtable panelists discussed the policy R&D process and suggested rather 

different approaches. Former BE Director Michael Salinger, for instance, argued that 

combining the agency’s policy groups might be sensible, but that the Bureau of 

Economics research work should remain independent of the legal policy shops and that 

the research process should remain decentralized.12 In contrast, two former heads of 

legal policy shops, Susan DeSanti13 and Joseph Kattan,14 favored a more centralized 

approach under which ideas from a wide variety of sources would be vetted early and 

production would be centrally controlled through an agency-wide committee. The goals 

of such an approach would be better to control the chosen topics – for example, to select 

projects that relate more closely with current enforcement or advocacy priorities – and to 

coordinate resource deployment across several relatively autonomous groups. 

VI. Deployment of Agency Resources 

A. General Issues Involving Resource Allocation 

An agency’s allocation of its scarce resources undoubtedly is one of the most 

significant determinants of its ultimate success. Once it identifies a desired outcome – 

for example, a reduction in the number of deceptive weight-loss claims – a successful 

agency will make optimal use of its tools to achieve that outcome. The FTC has several 

tools available to pursue its mission. These tools include law enforcement, first and 

foremost; however, they also include many other options – such as advocacy, education, 

policy research and development, and rulemaking – that can be more effective than 

enforcement in many circumstances. Resource allocation, then, is to a large extent a 

matter of picking the right tool or tools from the FTC’s existing arsenal – or adding new 

tools to that arsenal – to best address the matter at hand. 

B. The FTC’s Many Resource Deployment Options 

1. Law Enforcement/Litigation 

The FTC’s law enforcement authority encompasses both consumer protection and 

antitrust. In allocating resources to its law enforcement efforts, the agency should first 

consider the goals that underlie such efforts. Among the most important goals of the 

FTC’s law enforcement mission are providing guidance to industry, developing sound 

law, and obtaining consumer redress. Deterrence of unlawful conduct, however, is the 

lodestar of the agency’s law enforcement efforts. 

 

12 Salinger, 7/29 DC Tr. at 168-69. 

13 DeSanti, 7/29 DC Tr. at 128-31, 153. 

14 Kattan, 7/29 DC Tr. at 167-68. 

xv
Perhaps the most important consideration in evaluating the enforcement efforts of 

the FTC is its case selection. Such evaluation should consider where the agency decides 

to focus its enforcement efforts. For example, should that focus be where potential 

consumer benefits and/or redress are largest? Should the focus be on areas involving the 

greatest amount of commerce? How much of the agency’s enforcement efforts should be 

devoted to developing or clarifying competition and consumer protection doctrine? 

Another relevant factor in selecting cases is the litigation risk attendant to 

pursuing any given case. In the various external consultations, there was a fairly uniform 

view that the agency ought to be less risk-averse in bringing cases. Other considerations 

in evaluating the agency’s law enforcement efforts include the amount and type of case 

generation in which the agency engages, the appropriate number of cases to pursue at any 

given time, and the proper forum – administrative or judicial – for bringing cases. 

2. Policy Research and Development 

As discussed above, policy research and development at the FTC includes a broad 

array of activities designed to inform the agency’s pursuit of its competition and 

consumer protection missions. These activities include workshops, hearings, studies, 

reports, and ex post assessments of agency initiatives and actions. Consultations with 

various outside parties and representatives from other competition and consumer 

protection agencies identified significant support for the FTC’s allocation of resources to 

its policy R&D efforts. 

3. Advocacy 

As an important complement to its law enforcement mission, the FTC engages in 

competition and consumer protection advocacy before other policymakers, including 

state legislatures, regulatory boards, and officials; state and federal courts; other federal 

agencies; and professional organizations, such as bar associations. In response to 

requests or where public comments are sought, the FTC issues advocacy letters, 

comments, and amicus briefs, providing policymakers with a framework to analyze 

competition and consumer protection issues raised by pending governmental actions or 

ongoing judicial disputes. Advocacy can play a particularly important role in addressing 

governmentally imposed restraints on competition, where other tools may be unavailable. 

There was strong support among those consulted for the FTC’s advocacy efforts. 

4. Rulemaking 

 The Commission’s strongest policymaking tool, in addition to litigation, is 

rulemaking. In 1975, Congress granted the Commission express authority to issue 

substantive rules, referred to as Magnuson-Moss rulemaking, which requires more 

complex procedures than those needed for rulemaking pursuant to the Administrative 

Procedure Act (“APA”). During the past 15 years, 17 rules have been promulgated by 

the Commission, and several existing rules have been amended. In addition, three new 

rulemaking proceedings are in progress. Most new rules have been enacted based on 

xvi
specific statutes that authorized the use of APA rulemaking procedures. Also during the 

past 15 years, the Commission has made regulatory review and reform a high priority. 

Recognizing that over time some rules may become obsolete or unnecessary or simply 

need updating in light of new technologies and marketing techniques, the FTC initiated a 

program to review its rules at least once every 10 years. 

5. Guidelines, Guides, and Advisory Opinions 

To promote transparency and encourage compliance with the law, the FTC issues 

guidelines, typically in conjunction with the DOJ Antitrust Division, to provide guidance 

regarding the application of the U.S. antitrust laws. These guidelines explain competition 

policy in specific areas, such as horizontal merger review, collaborations among 

competitors, licensing of intellectual property, and health care. 

A central issue involving agency guidelines is one of timing – including the 

appropriate times at which to issue and, if necessary, update any given set of guidelines. 

Former BC Project Director for Intellectual Property Hillary Greene identified the 

“central tension” in formulating guidelines as follows: waiting until there is a sufficient 

consensus in any particular area of the law, on the one hand, and providing certainty and 

guidance in such area of the law, on the other hand.15

 Industry guides, which are published in the Code of Federal Regulations, or 

C.F.R., have become a vehicle to inform businesses how the Commission would apply 

Section 5 of the FTC Act in specific situations. Industry guides are advisory in nature – 

that is, they are not an independent basis for enforcement actions, and violations do not 

give rise to civil penalties. However, they serve to inform businesses about practices that 

could be considered unfair or deceptive. Industry guides typically focus on particular 

problematic practices in advertising, marketing, or labeling. Promulgation of guides does 

not require formal rulemaking proceedings, but, in recent years, the Commission has 

solicited public comments, and may hold a hearing or workshop, before adopting or 

substantively amending guides. Like rules, industry guides are subject to review every 

10 years. 

The FTC’s efforts at providing guidance to industry also include advisory 

opinions concerning proposed conduct provided in response to requests for advice. On 

the competition side, BC staff render so-called advisory opinions, which often involve 

issues in the health care field. On the consumer protection side, BCP staff render socalled staff opinion letters, which typically address proposed interpretations of FTC rules 

and regulations. Commission advisory opinions, which are issued relatively infrequently, 

are intended to address substantial or novel questions of fact or law or subjects of 

significant interest. 

 

15 Greene, Boston Tr. at 31. 

xvii
6. Consumer and Business Education 

During the past 20 years, educating consumers and businesses about their rights 

and responsibilities in the marketplace has become an increasingly important part of 

fulfilling the agency’s consumer protection mission. Enforcement efforts to combat fraud 

are enhanced by informing consumers how to recognize and avoid becoming victims of 

fraudulent marketing practices. For example, educating consumers not to respond to 

emails that “phish” for financial account information can be a more effective tool to 

combat this practice than bringing successive enforcement actions against numerous 

perpetrators. Educating businesses about their legal obligations under a variety of FTC 

rules enhances compliance, and to that end, the Commission issues clear, plain-language 

guides – in print and on video – that pose numerous examples of required or prohibited 

conduct. External consultations yielded widespread expressions of support for the 

agency’s consumer and business education efforts in the consumer protection area. 

7. Encouragement of Appropriate Industry Self-Regulation 

Meaningful self-regulation is an important complement to the Commission’s law 

enforcement efforts – particularly in the area of deceptive marketing practices. For 

example, the program administered by the National Advertising Division/National 

Advertising Review Council arm of the Council of Better Business Bureaus has worked 

well to obviate the need for Commission action in some instances. In cases where the 

process does not reach a successful conclusion, the matter is referred to the Commission 

with much of the underlying investigative work already accomplished. In addition, selfregulatory programs have been helpful in areas – such as food and entertainment products 

– where the Commission has advocated seller restraint in promotions directed to children. 

8. Partnership and Outreach with Domestic Agencies 

Another important tool available to the FTC is outreach to domestic agencies. 

The Commission’s engagement with domestic agencies involves efforts on both the 

policy level, including advocacy, as well as enforcement cooperation, facilitated by the 

Commission’s broad authority to share with domestic law enforcement agencies 

nonpublic information otherwise subject to prohibitions on disclosure. Enforcement 

cooperation can facilitate the Commission’s own investigation, where a federal or state 

agency shares expertise or provides investigative assistance. It also can leverage the 

Commission’s limited resources, by enlisting other agencies in undertaking efforts that 

advance the FTC’s mission. The FTC often seeks to maximize its enforcement impact on 

the consumer protection side by coordinating “sweeps” – multiple legal actions filed at or 

near the same time by multiple authorities. Cooperation with domestic (and foreign) 

enforcement agencies is an integral component of these sweeps. 

9. International Partnerships and Outreach 

The FTC recognizes that a competition and consumer protection agency cannot 

limit its activity or vision to its own borders, and thus devotes significant efforts to 

xviii
international activity, coordinated by its Office of International Affairs. As with the 

Commission’s dealings with domestic agencies, these efforts include engagement on 

policy initiatives and practices as well as enforcement cooperation. An important 

component of the policy engagement, mentioned above, is the FTC’s technical assistance 

program.

To obtain the most results from its engagement with foreign enforcers, both in 

bilateral and multilateral contexts, an agency with an effective international program 

develops short-, medium-, and long-term strategies that guide participation in these fora, 

with a clear idea about when the agency wants to take a leadership role and when the 

agency plans to take a more passive or “importing” role. The best-designed program 

identifies areas for teaching, and those for learning, recognizing that the two roles are not 

mutually exclusive. 

On the enforcement side, the Commission’s work with its foreign counterparts 

facilitates its ability to obtain meaningful and timely cooperation from foreign 

counterparts for FTC-generated investigations and litigation matters. Another critical 

dimension is the agency’s ability to influence the enforcement agenda and priorities of a 

foreign agency through notifications, consultations, and other bilateral mechanisms. A 

third dimension is the FTC’s capacity to provide assistance, in appropriate cases, to 

foreign authorities when they request the FTC’s assistance or refer complaints involving 

U.S. businesses. 

PART 3: MEASURING THE EFFECTIVENESS OF FTC ACTIONS

VII. Measuring Agency Effectiveness 

When assessing the characteristics of agency output, the FTC should stay focused 

on how its actions impact consumer welfare. Unlike agencies that produce a readily 

measurable output directly to consumers, however, the vast majority of FTC actions are 

not aimed at consumers directly, but rather toward parties – typically business and 

sometimes government – in an effort to stop conduct and mergers that threaten to harm 

consumers.16 For example, the FTC sues businesses for taking actions that violate the 

consumer protection and competition laws and engages in advocacy with governments to 

discourage anticompetitive regulation. Thus, there is an indirect link between FTC action 

and changes in consumer welfare: the FTC helps consumers primarily through its ability 

to reduce the occurrence of conduct that violates consumer protection or antitrust laws or 

otherwise reduces consumer welfare. 

 

16 Consumer education is an exception to this characterization. Unlike in the case of antitrust violations, 

consumers can take actions to reduce the probability of becoming a victim of fraud and deception. Thus, 

targeting messages directly to consumers to inform them of these actions can reduce the occurrence of 

fraud and deception. 

xix
A. Direct Measurements of Welfare 

Given widespread acceptance of the FTC’s consumer-focused mission, direct 

measurement of the increase in consumer welfare as a result of FTC actions would be 

ideal. As a practical matter, direct measurement of welfare effects entails comparing 

price and output in the relevant markets before and after the FTC action. For example, 

consumers pay higher prices and purchase fewer goods or services than they otherwise 

would in the case of an antitrust violation. As a result, consumers suffer direct financial 

losses, and also forego the satisfaction they could have received from additional 

purchases, had the price been set at the competitive level. Of course, events unassociated 

with FTC actions also affect cost and demand conditions and, hence, observed prices. To 

isolate welfare changes resulting from the FTC’s competition and consumer protection 

actions, it is important to control for other factors that also affect market outcomes and 

that occurred during a similar time frame. 

Several panelists addressed the promise and problems associated with direct 

measurement of market outcomes after FTC action in the context of merger 

retrospectives. Because mergers make up a large portion of the FTC’s competition 

caseload, the ability to evaluate the effect of mergers on consumers would go a long way 

toward direct evaluation of the FTC’s competition program. Panelists, however, spoke 

extensively about the limitations of such studies, identifying significant methodological 

and data constraints. Proponents of merger retrospectives argued that they need not all be 

price-focused, state-of-the-art empirical projects, but rather they can be useful if they 

provide replicable measures of postmerger performance on any of several dimensions. 

B. Proxies for Direct Welfare Measurements 

When direct measurement is not feasible, it is necessary to look for proxies for the 

impact of FTC actions on consumers, such as the outcome of enforcement actions; the 

direct impact, deterrent effect, and precedential value of these actions; the FTC’s 

intellectual leadership; the guidance and transparency provided by the FTC to businesses 

and consumers; and the burdens the FTC places on industry. 

Some proxies have a closer nexus with welfare changes than others. The raw 

number of cases brought is at best a limited metric to evaluate FTC enforcement actions. 

Further, a focus on the number or percentage of wins is likely to be similarly 

uninformative – a large number of wins, for example, is likely to signal that the 

Commission is bringing only easy cases and that more problematic conduct remains 

underdeterred. Rather, evaluators should pay attention to the extent to which the FTC is 

bringing the proper mix of cases to maximize its positive impact on consumer welfare. 

This mix will include cases in large markets that vindicate substantial consumer interests 

in the short run and also include cases that are likely to have large, long-run deterrent and 

precedential value. Determining the optimal mix of cases to use as a benchmark for the 

actual mix of cases is likely to be somewhat subjective. 

xx
Empirical study of the relationship between FTC enforcement (and other) actions 

and market outcomes may guide this endeavor. For example, evaluating the deterrence 

effects of enforcement actions targeting anticompetitive conduct may yield useful 

information to guide future enforcement efforts. Because consumers can take actions to 

reduce the incidence of fraud and deception, consumer education can be an effective 

adjunct to enforcement in promoting consumer protection. Evaluating the success of 

consumer education in reducing fraud and deception may be difficult in every 

circumstance, but a few carefully designed studies may provide valuable information. 

 FTC actions also should be evaluated to determine whether they demonstrate 

intellectual leadership in the areas of competition and consumer protection policy. 

Commission cases can lead the way in developing legal norms. Further, it is important 

for the FTC to engage in competition and consumer protection policy R&D to calibrate 

the fit between FTC actions and consumer welfare and to inform courts and policymakers 

in their decisions. The extent to which courts, policymakers, and academics follow the 

FTC’s lead in these areas is an important evaluative criterion. Educating the public and 

policymakers on the benefits of competition also is important. Thus, any evaluation 

should measure the extent to which consumers use FTC competition-promoting materials 

and the extent to which FTC advocacy influences policy outcomes. 

The external community values guidance from the FTC, and the agency should 

strive to make decisions more transparent to improve policy determinations. The FTC 

can provide such guidance and transparency through guidelines, industry guides, 

advocacy, speeches, and other domestic and international outreach that inform the 

relevant external constituencies about the FTC’s current thinking in certain areas. Any 

evaluation of FTC actions should ask whether the FTC adequately publicizes its actions 

and whether it effectively conveys policy norms to industry, the courts, and other 

constituencies. 

 

Evaluations of FTC output also should measure the extent to which FTC actions 

place unreasonable costs on the business community, both in terms of money and time. 

Such measurement will inform Congress, industry, and the public and also likely will 

enhance internal incentives to reduce burdens the FTC places on businesses. When 

developing a metric, it is important to develop appropriate benchmarks for both financial 

and time burdens, which are likely to vary by action. For example, it should consider the 

appropriate time to process investigations or from filing an administrative complaint until 

a final Commission decision. 

 C. Responsiveness to Core Constituencies 

Finally, being open and responsive to core constituencies’ concerns is crucial. 

Absent external support for its mission over time, the FTC cannot operate effectively. At 

the same time, it is important to distinguish between cultivating external support for the 

mission by demonstrating a willingness to take seriously constituency concerns, and 

attempting to garner unanimous support for every agency action. Further, the agency 

should be cognizant of the potential tension between intellectual leadership and 

xxi
xxii

responsiveness to constituency demands. When these circumstances arise, the FTC can 

ameliorate this tension by engaging in outreach to develop support from its constituencies 

for its policies. 

PART 4: CHAIRMAN’S RECOMMENDATIONS

The report concludes with a set of recommendations for consideration by future 

leaders of the FTC. The recommendations correspond to the review of the institutional 

arrangements by which the Commission performs its responsibilities (discussed in 

Chapters I-VI), as well as the means for measuring the effectiveness of the agency’s 

performance (discussed in Chapter VII). It is hoped that the process used for this selfassessment not only has illuminated ways to improve the Federal Trade Commission but 

also has supplied a template for future self-assessment exercises. 
PART 1: INTRODUCTION BY CHAIRMAN KOVACIC

The Rationale for a Self-Assessment 

Albert Cummins was one of the chief sponsors of the Federal Trade Commission 

Act of 1914. In the weeks before the passage of the legislation that would create the 

Federal Trade Commission (“FTC” or “Commission”), Cummins predicted that the new 

agency “will be found to be the most efficient protection to the people of the United 

States that Congress has ever given the people by way of a regulation of commerce.”1 A 

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

gave it life. How well is the agency fulfilling the destiny that Congress foresaw for it in 

1914? What type of institution should the Commission aspire to be when the agency’s 

second century begins in 2014? 

Over the past seven months, the FTC has conducted a self-assessment to consider 

these and other basic questions about the agency’s future direction. Two aims motivated 

this initiative. The first is to ask what the FTC must do to continue the valuable work 

that the agency performs today and to identify steps the agency must take to do still better 

in the future. The focus of this exercise is an agency that is one of the great success 

stories in the modern history of public administration. In the late 1960s, the 

Commission’s performance attracted scalding criticism that raised doubts about its 

continued existence.2

 Forty years later, the agency stands in the front ranks of the 

world’s competition policy and consumer protection institutions. 

None of this happened by chance. One crucial ingredient was the tireless 

commitment and strenuous labors of our attorneys, economists, and administrative 

professionals. Another was superior leadership that saw the way to greatness. Yet even 

more significant was the acceptance, in the face of crisis and in moments of success, of a 

culture that understood that the development of a superior institution demanded a 

willingness to ask the hardest questions about the agency’s purposes and performance. 

Good policy results are not suspended in air. They emerge from and rest upon a structure 

of institutional arrangements that are the product of statutory design and administrative 

implementation.3

 These arrangements encompass the organizational form of the FTC, 

formal rules that govern its operation, and informal customs or norms of behavior that 

 

1

 51 CONG. REC. 14,770 (1914). 

2

 This episode is recounted in William E. Kovacic, The Federal Trade Commission and Congressional 

Oversight of Antitrust Enforcement: An Historical Perspective, in PUBLIC CHOICE AND REGULATION: A

VIEW FROM INSIDE THE FEDERAL TRADE COMMISSION 63 (Robert J. Mackay et al. eds., 1987). 

3

 Recent decades have featured major contributions to the literature that focus on the role of institutions in 

shaping economic policy results. Much of this work has been developed by Douglass North and other 

scholars associated with what is known as the “New Institutional Economics” (NIE). See DOUGLASS C.

NORTH, INSTITUTIONS, INSTITUTIONAL CHANGE AND ECONOMIC PERFORMANCE (1990). 

1
have developed within the agency.4

 The FTC learned long ago that it is impossible to 

deliver the equivalent of broadband quality policy content over dial-up institutions. 

The urgency to revisit fundamental questions about the possibilities for 

institutional improvements stems from several sources. The policymaking challenges to 

the Commission grow ever more demanding. In carrying out its competition and 

consumer protection responsibilities, the agency confronts some of the most difficult 

issues of economic policy. The FTC’s success in a variety of initiatives – whether in 

protecting the privacy of the home through the Do-Not-Call Rule, striking down 

unnecessary barriers to rivalry in professional services, preparing reports that shape 

public debate or legislative deliberations about intellectual property, or contributing to the 

formation of networks that help promote international agreement on superior techniques 

– has created high expectations about the Commission’s capacity to respond to these 

challenges. The agency’s experience in undertaking these and other measures has shown 

that the pursuit of sensible policy solutions requires an unrelenting search for better 

practices. 

A further motivation to revisit basic questions is the example of our foreign 

counterparts. The world today is a vastly different place than it was when the FTC 

opened its doors nearly one hundred years ago. To be effective, an agency must account 

for the ever-growing international dimension of commerce. The intensification of crossborder economic integration has deeply affected consumer and business behavior and 

significantly influenced how the Commission and its foreign counterparts seek to 

accomplish their competition and consumer protection missions. 

This is an unparalleled era of institutional experimentation and reform in the 

fields of competition policy and consumer protection. We have much to learn from what 

happens outside our borders. Within the past decade, some of our more experienced 

counterparts – for example, the Australian Competition and Consumer Commission 

(“ACCC”), the Competition Commission and the Office of Fair Trading (“OFT”) in the 

United Kingdom, the Directorate for Competition (“DG Comp”) and the Directorate for 

Health and Consumer Affairs (“DG SANCO”) in the European Commission (“EC”), the 

Conseil de la Concurrence in France, the Cabinet Office in Japan, and the Competition 

Bureau of Canada – have undertaken a basic examination of key elements of their 

authority, organization, and operations. 

For example, in the consumer protection area, two of the most striking examples 

are Australia’s efforts to restructure its entire consumer policy framework and Japan’s 

ongoing examination and reorganization of governmental consumer protection 

 

4

 “Norms” are consensus views about how members of an organization or group ought to behave. Robert 

Cooter, Structural Adjudication and the New Law Merchant: A Model of Decentralized Law, 14 INT’L REV.

L. & ECON. 215, 218 (1994). Unlike commands embodied in formal legal rules, norms consist of customs 

that members of a group develop voluntarily and follow. See Lawrence E. Mitchell, Understanding Norms, 

49 U. TORONTO L.J. 177 (1999) (providing survey of modern legal and economic literature on norms). The 

role of norms in determining how public officials enforce legal commands is examined in Dan M. Kahan, 

Gentle Nudges vs. Hard Shoves: Solving the Sticky Norms Problem, 67 U. CHI. L. REV. 607 (2000). 

2
institutions. In Australia, the Productivity Commission, an independent research and 

advisory body, released a comprehensive report in May 2008 – based on nearly two years 

of consultations and analysis – on ways to improve the consumer policy framework to 

empower consumers, harmonize and coordinate consumer policy across Australian 

federal, state, and territorial jurisdictions, and avoid unnecessary duplication and 

increases in regulation.5 The Productivity Commission recommended the introduction of 

a single generic consumer law applying across Australia as well as the transfer of 

regulatory responsibility in several areas, including consumer credit, to Australia’s 

federal regulators. In October, the Council of Australian Governments (“COAG”) 

adopted many of the Productivity Commission’s recommendations, and implementation 

is underway.6

 In Japan, following a spate of consumer food safety incidents, a 

governmental panel delivered a report to the Prime Minister in June 2008 that 

recommended transferring overall responsibility for consumer protection matters from 

several different agencies to a new consumer agency that will come under the auspices of 

the Cabinet Office.7 Since then, the government submitted a bill to the Japanese Diet to 

establish a new Consumer Affairs Agency, which is currently under review. 

Over the past decade or so, several of the member states of the European Union 

(“EU”) have undertaken major programs of institutional renewal. In the United 

Kingdom, the government engaged in extensive legal reform starting with the 1998 

Competition Act, which introduced EC-style competition prohibitions into U.K. law, and 

the 2002 Enterprise Act, which created, among other things, a new governance structure 

for the OFT involving a board comprised of executive and nonexecutive directors. 

Following these legal changes, the OFT established a unit to engage in market studies 

and advocacy in 2002. In 2006, informed by outside evaluations, the OFT dismantled the 

division of labor along competition and consumer lines into sectoral market-facing areas, 

supported by specialist teams such as strategy and planning and evaluation, and internal 

back-of-house areas. As the result of an extensive review of its competition policy 

system, France soon will implement structural reforms that will establish a single 

competition authority from the two French agencies that currently share competition 

policy responsibilities. 

The European Commission’s DG Comp also has engaged in a major restructuring 

effort in this decade. Several losses in merger cases in 2002 inspired DG Comp to 

examine itself and undertake widespread reforms. The changes focused on defining 

activity by market concepts and industry knowledge, introducing more transparency and 

reducing hierarchy, providing for more flexibility in staff movement around the agency, 

 

5

 The Productivity Commission’s report is available at 

http://www.pc.gov.au/projects/inquiry/consumer/docs/finalreport. A summary of the key points is 

available at http://www.pc.gov.au/projects/inquiry/consumer/docs/finalreport/keypoints. 

6

 A communiqué dated October 2, 2008 from the COAG describing these developments is available at 

http://www.coag.gov.au/coag_meeting_outcomes/2008-10-02/index.cfm#regulat. 

7

 Consultation with Cabinet Office of Japan, Sept. 19, 2008. See also Policy Speech by Prime Minister of 

Japan Taro Aso to the 170th Session of the Diet (Sept. 29, 2008), available at

http://www.kantei.go.jp/foreign/asospeech/2008/09/29housin_e.html. 

3
and engaging case teams in internal peer reviews to improve the quality of enforcement 

actions. DG SANCO has conducted several forward-looking workshops and simulations 

to identify the key challenges it will face in the future, and to identify what skills, tools, 

internal processes, and working methods it needs to develop to meet those challenges.8

Newer agencies in such countries as Brazil, El Salvador, Hungary, Mexico, 

Singapore, South Africa, and South Korea also are exploring major institutional 

improvements. Two interesting examples in the consumer protection area are El 

Salvador and South Korea. In El Salvador, the consumer agency, the Defensoría del 

Consumidor, prepared a report that elevated consumer issues to the equivalent of 

“Cabinet-level” by developing a National System for Consumer Protection, composed of 

the Defensoría and representatives of the executive branch and other government 

institutions, to coordinate consumer protection issues.9

 In South Korea, the Korean 

Consumer Protection Board, which was a quasi-governmental entity, has merged with the 

Korean Fair Trade Commission, a governmental competition authority, enhancing the 

state’s support for consumer policy and enforcement missions and linking consumer and 

competition issues structurally. On the competition side, the Netherlands Competition 

Authority (“NMa”) has engaged in a more sophisticated balance of its various tools and 

enforcement instruments, focusing on risk-oriented enforcement action on a proportional 

scale and more on market studies, with less engagement in markets in which there are 

little or no problems and in which none are expected to arise, as well as additional efforts 

directed at informational campaigns, guidance, and compliance programs. 

The determination of our foreign counterparts, old and new, to benchmark 

themselves with their peers and to incorporate superior techniques into their own 

operations is well worth emulating.10 In the international arena, one hallmark of a good 

agency always has been its capacity to influence views of what constitutes sound 

competition and consumer protection policies by “exporting” ideas, mainly through the 

example of its own policy work and enforcement practice. Today, as the FTC’s overseas 

consultations for this project demonstrated, the difference between an agency with a good 

international program and one with an excellent international program may be the 

agency’s skill in importing ideas, as well. This demands close attention to the experience 

of other jurisdictions and the willingness to embrace superior practices from the rest of 

 

8

 A description of the project and the resulting paper are available at 

http://ec.europa.eu/dgs/health_consumer/events/future_challenges_en.htm. 

9 See OECD, COUNTRY STUDIES: EL SALVADOR – PEER REVIEW OF COMPETITION LAW AND POLICY 22 

(2008), available at http://www.oecd.org/dataoecd/8/49/41597078.pdf. 

10 See, e.g., U.K. DEP’T FOR BUS. ENTER. & REGULATORY REFORM (“BERR”), BENCHMARKING THE 

PERFORMANCE OF THE UK FRAMEWORK SUPPORTING CONSUMER EMPOWERMENT THROUGH COMPARISON 

AGAINST RELEVANT INTERNATIONAL COMPARATOR COUNTRIES (2008) (report prepared for BERR by the 

ESRC Centre for Competition Policy, University of East Anglia), available at 

http://www.berr.gov.uk/files/file47653.pdf. 

4
the world. The exchange of ideas and strategies in consumer protection and competition 

is increasingly “a two-way street.”11

If the FTC is to exert effective leadership in forming policy at home and abroad, 

we must be no less driven than our foreign counterparts to examine and enhance our own 

institutional framework and operations and have procedures in place to respond 

effectively to new commercial phenomena and to learn from developments taking place 

within established and emerging competition and consumer regimes around the world. 

What has emerged globally is a form of competition by individual jurisdictions to achieve 

superior regulatory frameworks. This rivalry reflects awareness that the attainment of 

superior frameworks – systems that achieve sound policy outcomes at the lowest cost to 

society – can be a valuable source of national economic advantage. That is a competition 

worth having, and the FTC means to be a successful participant in the contest. 

 

Another reason for the FTC to conduct this self-assessment is to ingrain in the 

agency a habit of periodic self-evaluation to illuminate the way to future improvements. 

To a large extent, the chief means for evaluating the performance of public institutions in 

the United States has consisted of convening from time to time (often in the face of crisis) 

blue ribbon panels of outside experts.12 So it has been with the Federal Trade 

Commission.13 To a point, these blue ribbon studies are helpful, but they have severe 

limitations. Among other weaknesses, the blue ribbon panels tend too often to glide over 

basic questions about the appropriate standards for measuring agency performance. 

Reviews of agency performance also take place through the work of committees 

assembled to facilitate the transition from one presidential administration to another. 

Presidential transition reports suffer from their own frailties. The imperative to turn them 

out in a short time – often a few weeks or months – sometimes imbues a transition 

report’s analysis and recommendations with glibness and superficiality. Because their 

drafters lack the time to place events in a larger historical context, policy prescriptions in 

these documents often focus myopically on the short term. Because their assessments of 

past performance set a benchmark against which future innovations can be assessed, the 

drafters may tend to devalue past accomplishments. 

The FTC at 100 project seeks to overcome these limitations by encouraging 

acceptance of a norm of periodic self-assessment and creating a template for the agency 

to engage regularly in an analysis of its performance. There is no substitute for the 

agency’s own sustained efforts to get things right. As George Stigler observed in a blue 

 

11 AMERICAN BAR ASS’N SECTION OF ANTITRUST LAW, 2008 TRANSITION REPORT 18 (2008) [hereinafter 

ABA TRANSITION REPORT], available at http://www.abanet.org/antitrust/at-comments/2008/11-

08/comments-obamabiden.pdf. 

12 On the use of blue ribbon panels as public administration evaluation mechanisms, see William E. 

Kovacic, Blue Ribbon Commissions: The Acquisition of Major Weapon Systems, in ARMS, POLITICS, AND 

THE ECONOMY – HISTORICAL AND CONTEMPORARY PERSPECTIVES 61 (Robert Highs ed., 1990). 

13 The use of blue ribbon panels to evaluate the FTC is recounted in William E. Kovacic, The Federal 

Trade Commission and Congressional Oversight, 17 TULSA L.J. 587, 592-602 (1982) [hereinafter Kovacic, 

Oversight]. 

5
ribbon study of defense procurement in 1970, “[n]o organization can achieve or maintain 

efficiency in structure or operation by having a critical review made by expert outsiders 

once each five or ten years. . . . A good organization must have built into its very 

structure the incentives to its personnel to do the right things.”14

The FTC at 100 project also has attempted to decouple the process of selfassessment from any single electoral cycle and to put the focus on adjustments that will 

improve the agency over the long term. By focusing on the Commission’s centennial, 

this exercise has sought to achieve a longer-term perspective and engage the agency in 

the valuable process of considering the goals that animated the agency’s creation and 

assessing how well the FTC has attained them. The aim is to identify approaches for 

improvement that are not only good today but will be good in the decades to come. 

Focal Points and Means

The FTC self-assessment has focused on two broad issues. First, when we ask 

how well the Commission is carrying out its responsibilities, by what criteria should we 

assess its work? The scholarly literature and popular commentary on the FTC is replete 

with rough assessments of whether the Commission is performing “well.” Far more often 

than not, the definition of “good performance” that presumably underpins such judgments 

is poorly specified. It is impossible to form conclusions about an agency’s performance 

without some basic understanding of what the agency ought to do. This, in effect, 

requires the construction of an agency report card. 

Second, by what techniques should we measure the agency’s success in meeting 

the normative criteria by which we determine whether the agency is performing well? 

Once standards for assessing performance are chosen, it is necessary to decide how to 

apply them. How, in other words, are grades to be calculated? A major aim of this 

element of the self-assessment is to identify the best means for measuring the effects and 

quality of what the FTC has done. 

We addressed these questions through a mix of internal deliberations and external 

consultations. We asked difficult questions of ourselves and sought to see ourselves as 

others see us. The external consultations took two forms. We conducted extensive 

interviews and convened 12 workshops (including seven outside the United States) at 

which expert observers from academia, business groups, consumer organizations, and 

government bodies discussed the Commission’s programs, operations, and organization. 

The self-assessment yielded three basic products. One is a consideration of the 

agency’s likely resource needs over the next five to six years. The second was a 

collection of observations from our external consultations about the quality of individual 

substantive and procedural measures that the FTC has undertaken. The third is a review 

of the institutional arrangements by which the Commission performs its responsibilities. 

 

14 BLUE RIBBON DEFENSE PANEL, REPORT TO THE PRESIDENT AND THE SECRETARY OF DEFENSE ON THE 

DEPARTMENT OF DEFENSE 198 (1970). 

6
This report presents the third of these products. Although the report does not treat 

all topics addressed in our deliberations, or examine some matters in complete detail, 

many of the proceedings have been posted on the FTC’s website for fuller study. We 

hope that the process used for this self-assessment not only has illuminated ways to 

improve the FTC but also has supplied a template for future self-assessment exercises. 

Conclusion: The Engineering of Competition and Consumer Protection Policy 

The progress of the Federal Trade Commission in its modern era has built heavily 

upon the willingness of its people to assess their work critically and explore possibilities 

for improvement. Critical self-study and external consultations not only have helped 

identify paths to achieving greatness, but also have renewed the institution’s commitment 

to fulfill the destiny that Congress in 1914 wished it to achieve. 

The FTC at 100 self-assessment is the latest element of that tradition, and the 

exercise has yielded valuable insights about strengthening the agency. Several areas 

stand out. The inquiry has helped identify what resources – personnel, facilities, 

equipment – the FTC will need to perform its duties in the future. Nothing is more vital 

to the success of the Commission than its human capital. A crucial reason for the 

agency’s improvement in recent decades is a progressive strengthening of the quality of 

its administrative professionals, attorneys, and economists. A second reason is the 

farsighted investment the agency has made in information technology to improve the 

productivity of its employees. Nothing will be more vital to our future success than 

seeing that the modern historical trend toward assembling an ever more capable staff and 

ever more powerful technological tools to support them continues. This inquiry also has 

helped identify steps the agency should take, once it has attracted talented individuals, to 

make the workplace a most satisfying experience. 

A second result is to suggest how the FTC might improve its approach for 

choosing strategies for exercising its powers. No task of administration is more 

important than selecting priorities.15 Everything the Commission does flows from its 

process for deciding which pursuits are most worthy of its attention. The setting of 

effective strategies calls for the agency to use its litigation and nonlitigation tools. 

Among other features, this exercise involves deciding how to set the agenda for the 

FTC’s research program. From the start, the Commission was intended to undertake 

studies and to supplement and undergird its enforcement efforts with a broad research 

agenda. Today, in a world of multiple competition and consumer protection decision 

makers, intellectual leadership assumes an ever-increasing role in determining the ability 

of an individual agency to shape policy developments. Identifying the best possible form 

and application of our research activities is indispensable to the FTC’s ability to exercise 

intellectual leadership. 

 

15 See William E. Kovacic, The Importance of History to the Design of Competition Policy Strategy: The 

Federal Trade Commission and Intellectual Property, 30 SEATTLE L. REV. 319 (2007). 

7
A third product of this self-assessment has been to identify how the FTC can 

strengthen its processes for implementing its programs. The manner in which an agency 

organizes its operations deeply shapes the quality of its substantive initiatives and affects 

the costs that firms bear in complying with the agency’s commands. Finding better ways 

to organize our operations not only will improve the Commission’s own efficiency but 

also can reduce the compliance costs for business operators without diminishing the 

effectiveness of the agency’s substantive programs. 

Finally, the inquiry has pointed to how the FTC can better fulfill its duties by 

improving links with other government bodies and nongovernment organizations. 

Cooperation among government bodies within and across jurisdictions is one of the most 

important frontiers for improving the productivity and effectiveness of public competition 

and consumer protection authorities. The broad decentralization of authority within the 

United States, the emergence of multiple regulatory authorities around the world, and the 

awareness of heightened interdependence among regulators and national regulatory 

regimes underscore the need for stronger interagency networks and intensified 

collaborative projects. The gains from greater cooperation also extend to the FTC’s 

relationships with nongovernment bodies, such as academic research centers, consumer 

groups, and professional societies. 

The emphasis throughout the study is institution-building. Discussions about 

competition law and consumer protection tend to focus heavily on conceptual issues of 

doctrine and large questions about the appropriate substance of public policy. The 

attention given to these unquestionably important matters – the “physics” of competition 

policy and consumer protection – obscures the importance of how to engineer institutions 

and programs that can transform theory and concepts into effective programs. This study 

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

recognizes that successful public policy outcomes are the product of good physics and 

good engineering. It takes faith in the proposition that has guided generations of 

successful athletes and musicians: over time, good technique begets good performances. 

 The orientation of this study also is long-term in nature, at least by the customs of 

national policymaking in the United States. The measures suggested here generally do 

not lend themselves to instant accomplishment but instead require sustained, incremental 

effort. The five-year focus seeks to draw attention to institution-building activities that 

demand a continuity of effort across administrations and across the tenure of individual 

chairmen. The public policy environment in the United States does not tend to nurture 

this perspective. In the eyes of many observers, the reputations of individual agency 

officials are set by observable events that transpire during the individual’s tenure. This 

point of view discourages investments in activities with long-term, capital qualities that 

generate benefits to the agency well beyond a single manager’s time in office. 

Fred Hilmer, the President of the University of New South Wales and a major 

figure in the modern development of Australia’s competition policy and consumer 

protection system, tells his executive MBA students that the success managers enjoy 

today probably has roots in decisions taken by their predecessors five or more years ago. 

8
Professor Hilmer poses the following inquiry to his manager-students: what are you 

doing today to improve the lot of your successors five years hence? This report seeks to 

answer that challenge for the FTC by encouraging acceptance of a norm that gives proper 

attention to building and enhancing the institutional foundations on which good policies 

must stand. 

9
PART 2: INSTITUTIONAL FOUNDATIONS OF SUCCESSFUL

FTC PERFORMANCE

One cannot make sensible judgments about whether an agency is performing 

skillfully or poorly without first defining the criteria by which the agency will be tested. 

It is a meaningless exercise to say that an agency today is good or bad, doing better or 

worse, or surpassing other institutions without identifying the grounds for the assessment. 

By what criteria are we to decide whether the FTC is a good institution? The 

definition of standards is fundamental to the study of the performance of the Commission 

or any other public body, yet the need to clearly specify criteria frequently gets less 

attention than it deserves. The literature on the FTC underscores the point. There is a 

massive body of commentary that evaluates the programs, operations, and structure of the 

FTC. Two flaws weaken many of these accounts. Some commentators offer broad 

qualitative judgments without a clear statement of standards. In the course of trying to 

increase the gravity of their own assessments by discerning longstanding trends, other 

authors mechanically invoke the conclusions of earlier assessments without carefully 

studying the criteria employed by previous analyses. 

This self-study dwelled extensively on the basic question of what criteria serve to 

separate good performance from adequate or weak performance. One of its central aims 

was to identify institutional features that beget good substantive outcomes over time. 

Public policy is delivered through an infrastructure of institutional arrangements. The 

quality of a jurisdiction’s institutional infrastructure shapes substantive policy results. 

Presented below are the institutional arrangements whose attainment ought to be the 

FTC’s objective. 

10
I. Agency Mission 

 A fundamental characteristic of a good institution is the clarity with which it 

understands its purpose and defines its “mission.” The FTC’s mission has two 

dimensions. One is related to the substance of policy, and the other deals with the 

process by which policy is formed. The substantive dimension consists of the public 

policy goals that the Commission should accomplish on behalf of the American public.16 

The FTC functions well as an institution when it clearly defines what it means to do and 

spells out how it will go about its duties.17 A well-defined conception of the agency’s 

aims helps facilitate the choice of projects by which the agency implements its authority. 

To do these tasks well, the Commission needs to understand what problems Congress 

created it to solve.18

The second dimension of the FTC’s mission involves the means that Congress 

placed at its disposal to address economic policy issues. Congress gave the Commission 

a distinctive collection of institutional endowments. These include law enforcement 

powers, a collegial governance structure, special information gathering tools, the 

authority to issue reports, the combination of competition policy and consumer protection 

responsibilities, an elastic substantive mandate, rulemaking powers, and the authority to 

use administrative adjudication to articulate standards of business conduct. The 

Commission’s application of this portfolio of policy instruments is no less an ingredient 

of its mission than the attainment of substantive policy goals entrusted to it. If the agency 

cannot produce superior policy outcomes by reason of this combination of policymaking 

attributes, the rationale for the FTC’s very existence comes into question. 

Both dimensions of the FTC’s mission ideally should be defined in a manner that 

facilitates meaningful measurement of whether the agency is achieving its substantive 

aims and using its distinctive institutional capabilities effectively. Measurement is the 

final element in a public administration lifecycle that begins with the definition of aims, 

proceeds with the selection of implementing programs, and concludes with the 

assessment of results. In measuring how well the agency uses its capabilities to 

formulate competition policy or consumer protection policy, the Commission should 

focus on the economic outcomes it achieves for the public (for example, reducing 

economic losses that result from fraud), rather than focusing on the inputs the FTC 

dedicates to a task (for example, the number of staff assigned to address activities in a 

certain sector) or the program outputs it generates (for example, the number of cases filed 

 

16 In discussing the performance of government bodies, James Q. Wilson refers to “critical tasks,” which, if 

achieved, will deal with the agency’s “key environmental problem.” See JAMES Q. WILSON,

BUREAUCRACY: WHAT GOVERNMENT AGENCIES DO AND WHY THEY DO IT 25-26 (1989). This section of 

the report uses mission and goal interchangeably. 

17 See, e.g., Timothy J. Muris, Principles for a Successful Competition Agency, 72 U. CHI. L. REV. 165, 167 

(2005) [hereinafter Muris, Principles]; Ellig, 7/30 DC Tr. at 6-7. 

18 Breul, 7/30 DC Tr. at 15 (“[H]igh-performing organizations have a clarity of their purpose . . . . 

[W]ithout that clarity and understanding of the problem to be solved, you really can’t move on.”). 

11
or the number of studies completed). Practical difficulties associated with directly 

measuring economic outcomes account for the frequency with which the Commission 

and other authorities fall back upon agency inputs or outputs as proxies for economic 

impact. 

Once the agency has defined the substantive and process elements of its mission, 

the Commission must articulate these elements clearly to enable its own staff and 

external constituencies to understand what the agency is trying to achieve and how it is 

seeking to do so.19 The FTC’s clear articulation of its mission is a vital means by which 

it attains the necessary objective of building support for its work from internal and 

external constituencies over time. 

In this section, we address these and related issues concerning the Commission’s 

mission. In doing so, we draw upon various views of the FTC’s mission that were 

presented during the public consultations of the self-assessment. Some concepts, 

particularly the challenges of measuring successful completion of the mission and 

gaining external support, also will be discussed in greater detail later in the report. 

A. Clearly Articulating the Mission 

 As a threshold matter, agency leaders must clearly articulate the agency mission 

so that staff and external constituencies have a firm grasp of the organization’s 

objectives.20 As one leading public administration scholar has explained: 

Everyone in the organization needs to understand the big 

picture. Thus, the leaders of the organization need to 

proclaim, clearly and frequently, what the organization is 

trying to accomplish. . . . If the agency’s leaders want 

everyone in the organization to take the mission seriously, 

they need to reiterate its fundamental points at every 

opportunity.21

For some administrative agencies, statutes clearly specify the mission. For 

example, the Social Security Administration (“SSA”) is required by law to send monthly 

checks to eligible persons. Accordingly, the SSA easily has discerned its mission – to 

pay benefits on time and accurately – from its statute. 

 

19 See MARK A. ABRAMSON ET AL., THE OPERATOR’S MANUAL FOR THE NEW ADMINISTRATION 25 (2008) 

(explaining that Robert Behn recommends that agency heads “proclaim – clearly and frequently – what the 

organization is trying to accomplish”). 

20 See id. at 25-26. 

21 ROBERT D. BEHN, PERFORMANCE LEADERSHIP: 11 BETTER PRACTICES THAT CAN RATCHET UP 

PERFORMANCE 8-9 (2006). See also ABRAMSON ET AL., supra note 19, at 7 (explaining how one key 

component of the Veterans Health Administration’s transformation was clearly articulating its vision). 

12
The clarity found in the Social Security example is not ubiquitous. Most 

government agencies “are likely to have general, vague or inconsistent goals, about 

which clarity and agreement can only occasionally be obtained.”22 The urgency to 

achieve clarity and coherence in policymaking is especially acute for the FTC, to which 

Congress has given responsibility for implementing over 50 statutes. Given the array of 

policy impulses that motivated the enactment of these measures, it may not be possible to 

identify a single unifying principle that links all legislative commands within the 

Commission’s policymaking domain. Nonetheless, continuous FTC efforts to identify 

and reinforce common aims across the span of its jurisdiction serve the important end of 

building a coherent portfolio of projects that address the most serious competition and 

consumer protection problems while minimizing inconsistencies or contradictions that 

reduce its effectiveness. 

A vital starting point for this endeavor is the Commission’s principal statutory 

mandate. Section 5 of the FTC Act prohibits “unfair methods of competition” and bars 

“unfair or deceptive acts or practices.”23 The key operative terms of these commands are 

not self-defining, and it is difficult to derive an operational mission directly from their 

text.24 In these circumstances, the FTC and other agencies with comparatively openended substantive mandates must define and develop an operational mission. The 

Commission’s leadership should ensure that the mission derived from broad statutory 

commands is sufficiently specific in identifying what the FTC does to guide agency 

action. 

From time to time, Congress has amended the FTC Act to define more fully some 

of the statute’s most general commands. For example, Section 5 of the FTC Act today 

provides that the Commission cannot find an act or practice to be unfair unless it “causes 

or is likely to cause substantial injury to consumers which is not reasonably avoidable by 

consumers themselves and not outweighed by countervailing benefits to consumers or to 

competition.”25 Reflecting these provisions, the Commission has defined its mission as 

follows: “To prevent business practices that are anticompetitive or deceptive or unfair to 

consumers; to enhance informed consumer choice and public understanding of the 

competitive process; and to accomplish these missions without unduly burdening 

legitimate business activity.”26

 

22 WILSON, supra note 16, at 26. 

23 15 U.S.C. § 45(a)(1). 

24 Some have observed that the FTC’s organic statute – calling for it to prevent “unfair” and “deceptive” 

business practices – is too vague to define a mission. See WILSON, supra note 16, at 59; Muris, 7/29 DC 

Tr. at 19 (“the statute is way too broad in providing any sort of rigorous guidance”). But see Ellig, 7/30 DC 

Tr. at 32 (“I think that the FTC’s organic statute is more focused than the mandates that some federal 

agencies have, where at least there’s clearly a focus on the consumer which in some cases is specific 

enough to guide action.”). 

25 15 U.S.C. § 45(n). 

26 FTC, STRATEGIC PLAN: FISCAL YEARS 2006-2011, at 1 (2006) [hereinafter 2006 FTC STRATEGIC PLAN], 

available at http://www.ftc.gov/opp/gpra/spfy06fy11.pdf. 

13
There appears to be widespread understanding that the FTC’s current mission 

focuses on consumers and that the improvement of consumer welfare is the proper 

objective of the agency’s competition and consumer protection work.27 An important 

consequence of this focus is that Commission policy does not seek to enhance or degrade 

the position of individual market participants as an end in itself. For example, the 

improvement of market outcomes for consumers, and not the status of specific firms or 

collections of enterprises, is the reason to challenge fraud, deceit, and related forms of 

unfair practices, and to police anticompetitive mergers and other practices that 

improperly suppress rivalry in the marketplace.28 This perspective appears to enjoy 

broad support within the community of competition policy and consumer protection 

agencies. During his tenure as the first Chief Economist in DG Comp, Lars-Hendrik 

Röller punctuated this concept with his habit, in the course of discussions about proposed 

enforcement initiatives, of asking case handlers, “What is the theory of consumer harm?” 

To say that the well-being of consumers, rather than individual producers, is the 

appropriate concern of competition and consumer protection policy does not by itself 

determine exactly what an agency with these responsibilities should do. Modern 

commentary and the consultations for the FTC self-study display extensive discussion 

about what specific competition and consumer protection initiatives best serve consumer 

interests in the immediate term and for the long run. How much weight, respectively, do 

efficiency effects and distributional consequences deserve in the decision to intervene? 

Are the efficiency gains realized by producers cognizable only if producers pass those 

gains largely or entirely to consumers in the relatively short term? 

 

The FTC self-study did not try to resolve these debates, but several informative 

observations concerning the issue emerged from the proceedings. The first is that 

modern FTC programs designed to address improper collusive or exclusionary 

restrictions on output, price, or quality commonly have positive distributional effects as 

well as efficiency consequences.29 The same can be said of the agency’s consumer 

protection programs. For example, many initiatives undertaken as part of the 

Commission’s program to combat serious fraud have special significance for 

economically disadvantaged populations or other social groups that, for various reasons, 

 

27 Former Chairman Robert Pitofsky has observed that the FTC’s competition and consumer protection 

activities share the overriding mission of improving consumer welfare. More than Enforcement: The 

FTC’s Many Tools – A Conversation with Tim Muris and Bob Pitofsky, 72 ANTITRUST L.J. 773, 780-81 

(2005) [hereinafter, Conversation with Muris and Pitofsky]. See also Ellig, 7/30 DC Tr. at 33-35 (arguing 

that, although the competition (and consumer protection) laws are relatively broad, there is a consensus 

among the Commission and the antitrust community generally that consumer welfare is the focus of the 

antitrust laws). 

28 As former Chairman Timothy Muris made the point, since the 1970s there has been agreement that the 

FTC’s core mission is to protect the competitive process: “The FTC is an umpire. It’s not one of the star 

players.” Muris, 7/29 DC Tr. at 20. 

29 A representative illustration can be found in FTC efforts to challenge unjustified public and private 

restrictions on the provision of professional services. See William E. Kovacic, Competition Policy, 

Consumer Protection, and Economic Disadvantage, 25 WASH. U. J.L. & POL’Y 101, 109-10 (2007) 

(discussing FTC decision in 2004 to strike down certain limits on the use of dental hygienists to provide 

fluoride treatments to public school children). 

14
might be especially vulnerable to fraudulent sales schemes.30 In general terms, it is 

difficult to find instances in which the pursuit of the programs that have formed the core 

of the FTC’s modern competition and consumer protection programs have featured a 

tension between the attainment of efficiency and distribution-related goals, respectively. 

Second, many roundtable panelists commented on the disciplining role that a 

focus on consumer welfare provides. For example, one panelist noted that focusing on 

consumer welfare, rather than also on potentially countervailing, and less measurable, 

interests like “fairness,” provides “clarity of objective.”31 In the context of the FTC’s 

efforts to apply its authority to forbid unfair methods of competition and to ban unfair or 

deceptive acts or practices, an emphasis on preventing and redressing consumer harm 

provides a valuable means for ensuring that the application of the agency’s powers will 

make markets work better for consumers. 

In addition to the broad substantive reach of its mandate, the FTC has a broad 

sectoral reach. The Commission’s enforcement jurisdiction extends to conduct “in or 

affecting commerce” in most sectors of the economy.32 However, the FTC Act (and 

sometimes other laws) imposes certain limits on the Commission’s sectoral reach, 

including limits applicable to common carriers and financial sectors.33 Some panelists 

expressed the view that the FTC’s mission should be extended to encompass areas of 

commerce currently subject to limits on the agency’s jurisdiction. For example, one 

panelist advocated expanded FTC law enforcement jurisdiction to “represent the 

consumer interest at the federal level” in areas such as banking and mobile phones.34 

Similarly, another panelist noted that, in the wake of the current financial crises, the FTC 

should play a major role when Congress reforms the current regulatory oversight scheme 

for financial services companies currently beyond the scope of FTC jurisdiction.35 These 

suggestions were consistent with the basic articulation of the agency mission to protect 

consumers in the marketplace. 

 The concern about the modern suitability of longstanding jurisdictional limits 

underscores an important point about the FTC’s mission. The definition of aims is 

inherently evolutionary. Technological innovation and other commercial phenomena call 

for periodic reassessment of assumptions that guided the establishment of exemptions 

and other restrictions on the Commission’s authority. More generally, dynamism in 

 

30 Id. at 114-15 (discussing, among other FTC programs, the development earlier this decade of a program 

to address fraud directed toward Spanish speakers in the United States). 

31 See Humpherson, London Tr. at 24-25 (the “clarity of objective” that comes from a focus on consumer 

welfare is “one of the great strengths” that competition authorities enjoy); Bloom, London Tr. at 23 (“I 

would be cautious about adding something like fairness. If you did widen it, what happens if you satisfy 

the fairness one but it reduces welfare? So you could have a tension if you have more than one 

objective.”). 

32 See 15 U.S.C. § 45. 

33 See id. § 45(a)(2) (exclusions applicable to common carriers and financial institutions). 

34 See T. Schwartz, Chicago Tr. at 52-54. 

35 See Swire, NY Tr. at 203-04, 209. 

15
commerce and in public administration call for the FTC to revisit from time to time the 

reason for its existence and to ask how its goals best can be realized. The question of 

implementation – how the FTC should carry out its consumer-focused mission – will be 

explored throughout the remainder of this report. 

B. Measuring Outcomes Rather than Outputs 

In addition to a clearly articulated mission, there should be a close nexus between 

the mission and outcomes for the public that can be measured.36 Missions focused on 

agency outputs (such as cases) rather than outcomes (such as increased consumer 

welfare) may not lend themselves to meaningful measurements of public benefits.37 

It is typically easier to identify and measure government agencies’ outputs rather 

than outcomes. Thus, agency leaders should articulate a mission that lends itself to 

developing outputs that enjoy a close nexus with desired outcomes.38 For example, in the 

context of public health, an agency might confidently assume that increased output of 

immunizations will advance a mission focused on the outcome of a healthier 

population.39 As one roundtable panelist explained with regard to the U.S. Department 

of Health and Human Services: 

 

One of the things that they’re trying to do is improve the 

safety, quality, affordability and accessibility of healthcare; 

prevent and control disease, injury, illness and disability; 

protect the public from infectious occupational, 

environmental and terrorist threats. . . . [I]f you listen to 

that carefully you could think, gosh, measures darn near 

fall right out of that. . . . [T]hey look at things like 

percentage of the population with prescription drug 

coverage. That’s something that’s verifiable, tells you 

whether they’re achieving some of their mission or not. 

The number of people and percent of people in the country 

with ongoing access to healthcare. The percentage of the 

population with immunization coverage. These are all 

things that are either health outcomes or closely related to 

health outcomes that fall right out of their mission.40

36 Measurement of outcomes may be direct or via output proxies. See infra Chapter VII for a more detailed 

discussion of this topic. 

37 See Breul, 7/30 DC Tr. at 23-24; Ellig, 7/30 DC Tr. at 25-26. 

38 See BEHN, supra note 21, at 10-12. See also Sanderson, Ottawa Tr. at 23 (stressing importance of 

focusing on outcomes rather than outputs). 

39 See BEHN, supra note 21, at 12. 

40 Ellig, 7/30 DC Tr. at 18-19. 

16
In some cases, theoretical analysis or empirical research can provide a confident 

basis for determining that certain types of outputs – for example, prohibitions on 

agreements by rivals to restrict truthful advertising or rules forbidding sellers to make 

unsubstantiated claims about the efficacy of weight-control products – ordinarily serve to 

improve consumer welfare. Even for these policy presumptions, it is appropriate for 

public officials to consider from time to time whether the assumptions that support 

investments in certain types of outputs remain sound. A further matter for continuing 

observation and analysis is whether adjustments in the specific mix of outputs might 

achieve better policy results. For example, the initiation of cases to prosecute serious 

marketing fraud properly can rest upon the assumption that serious fraud ordinarily 

diminishes consumer welfare, typically enjoys no legitimate business justifications, and 

warrants categorical condemnation. At the same time, the FTC and other consumer 

protection agencies might consider supplementing anti-fraud cases with consumer 

education programs that encourage precaution taking by potential victims. Over the past 

decade, this type of examination has led the Commission to increase outlays for 

consumer education and to hold occasional workshops to explore enhancements in its 

program to deter fraud.41 In this area and in other matters, an outcome-focused policy 

perspective helps ensure that the Commission’s existing programs are not simply a 

consequence of adhering to custom and that the FTC remains alert to possibilities for 

improving results for consumers by adjusting the mix of its policy initiatives. 

Several foreign enforcement agencies that also have responsibility for both 

consumer protection and competition matters have mission statements that are focused on 

outcomes and reflect such agencies’ dual roles. The mission of the U.K. Office of Fair 

Trading, for example, is “making markets work well for consumers.”42 The Canadian 

Competition Bureau’s vision is “to be an organization of excellence that produces high 

impact outcomes and is flexible in order to meet the challenges of the marketplace today 

and in the future.”43 The purpose of the New Zealand Commerce Commission “is to 

promote dynamic and responsive markets so that New Zealanders benefit from 

competitive prices, better quality and greater choice.” New Zealand’s statement of aims 

identifies three strategic goals: (1) “markets are dynamic and all goods and services are 

provided at competitive prices”; (2) “consumers are confident of the accuracy of 

information they receive when making choices”; and (3) “regulated industries are 

constrained from earning excess profits, face incentives to invest appropriately and share 

efficiency gains with consumers.”44 

 

41 The FTC’s Fraud Forum scheduled for late February 2009 is an example of this type of initiative. See

FTC Press Release, FTC to Host “Fraud Forum” (Oct. 7, 2008), available at

http://www.ftc.gov/opa/2008/10/fraud.shtm. 

42 U.K. Office of Fair Trading Home Page, http://www.oft.gov.uk/. 

43 Canadian Competition Bureau, Competition Bureau Priorities At-a-Glance 2008 to 2010, 

http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/vwapj/priorities-en.pdf/$FILE/priorities-en.pdf. 

44 New Zealand Commerce Commission, 

Overview, http://www.comcom.govt.nz/TheCommission/Overview.aspx. The Commerce Commission, 

unlike the FTC, has primary responsibility for regulated sectors. 

17
Beyond emphasizing outcomes rather than outputs, a mission that focuses on 

measurable outcomes has several advantages. First, it can provide staff with information 

on how their actions affect achievement of the agency’s goals. This information can 

allow the agency and its staff to better calibrate actions against goals, which can improve 

effectiveness. If the agency can define a mission for which it can identify measurable 

outcomes, managers can more easily understand where they are successful and where 

they must improve. Second, a measurable outcome-focused mission can motivate 

improved performance by allowing staff to know when they are performing their job 

well. Third, when missions focus on outcomes rather than inputs or outputs, the agency 

more readily can adjust the allocation of its resources better to achieve desired policy 

results while continuing to focus on the agency goals.45 Alternatively, if the mission is 

not defined in a readily measurable way, an agency can expend scarce resources engaging 

in activities that do not advance its goals. 

 The consultations with the Canadian Competition Bureau (“Bureau”) revealed a 

promising approach to incorporating the measurement of outcomes into the definition of 

its mission and its selection of individual projects. In recent years, the Competition 

Bureau has moved toward pressing its operating units to state, when proposing new 

investigations, cases, or other measures, how the effectiveness of a chosen initiative 

might be measured as the initiative unfolds.46 The Bureau’s practice seems worthy 

emulating. By asking its project teams to address from the beginning “how will we know 

this initiative is working” seems a useful way to assist the Commission in deciding which 

matters to pursue and to monitor progress toward the accomplishment of the agency’s 

goals. 

A further advantage of emphasizing the measurability of outcomes involves the 

FTC’s external constituencies. Measurability of outcomes allows political decision 

makers, nongovernment constituencies, and the general public better to estimate the 

particular level of public benefits associated with a given outlay of public funds. In this 

manner, measurable outcomes will allow Congress to allocate more efficiently scarce 

government resources to maximize benefits per dollar spent. The Commission’s capacity 

to define its mission in terms of measurable outcomes has assumed greater importance at 

a time of financial crisis in the United States and overseas. To some observers, the crisis 

has raised doubts about the utility of competition and consumer protection policies that 

rely principally on market-based, decentralized economic choice as the way to organize 

economic affairs. In such an environment, the FTC and its counterparts overseas cannot 

expect those outside their walls to accept the value of their competition policy and 

consumer protection programs as a matter of faith. Quantitative and qualitative measures 

of effectiveness necessarily will assume greater prominence. With growing frequency, 

 

45 See BEHN, supra note 21, at 12 (noting that when target outputs do not further the mission, which is 

focused on an outcome, agency leaders need to adjust target outputs); Ellig, 7/30 DC Tr. at 18 (“[When] the 

focus is on the goal rather than the means of the goal . . . [y]ou can dispose of the way of doing things or a 

means if it doesn’t work, but the focus on the goal remains.”). 

46 Consultation with Canadian Competition Bureau, Sept. 17, 2008. 

18
competition and consumer protection authorities can expect to hear variants of the 

aphorism that says: In God we trust. All others provide data. 

Chapter VII of this report examines more fully how best to measure the FTC’s 

effectiveness in general and the impact of its programs on consumer welfare. As a 

general matter, the FTC since the late 1970s has devoted growing attention to the 

question of how to measure the effects of its policy choices. In this endeavor, the 

agency’s Bureau of Economics and its data gathering and reporting powers have supplied 

a valuable foundation for devising approaches to measure the economic effects of FTC 

decisions to intervene and not to intervene. As one panelist noted, this form of economic 

expertise provides a vital tool for measuring whether actions had positive effects on 

consumer welfare: “[A]lthough consumer protection and competition laws are relatively 

broad, there is a consensus among the Commission and the antitrust community generally 

(e.g., courts, academics, practitioners) that consumer welfare is the guiding principle for 

antitrust laws, and economic analysis, in turn, is the proper method for determining what 

advances consumer welfare.”47 Another panelist noted that the FTC consumer protection 

mission’s market-based approach is conducive to measurement because, like the 

competition mission, it is intended to protect and promote consumer welfare.48 

C. Internal and External Support for the Mission 

A successful agency must enjoy support for its mission from core constituencies 

inside and outside the institution. For the agency to gain and maintain such support, 

these constituencies must understand the mission and be able to determine whether the 

agency is carrying out its responsibilities successfully. 

For the FTC, one core constituency is its own staff of administrative 

professionals, attorneys, and economists. The Commission derives significant 

advantages from building widespread internal agreement upon and endorsement of its 

mission. Among other benefits, such support enables managers to economize on 

resources. When the FTC’s staff understands and embraces the agency’s stated aims, 

managers need spend less time to create incentives for staff to pursue the mission and can 

reduce the effort devoted to monitoring whether staff’s efforts are consistent with the 

FTC’s mission.49 

Some foreign agencies, such as the Australian Competition and Consumer 

Commission, the Canadian Competition Bureau, and the U.K.’s Office of Fair Trading, 

build support among staff for the agency’s mission by devoting extensive effort to 

 

47 Ellig, 7/30 DC Tr. at 33. 

48 See Peeler, 7/30 DC Tr. at 134-35 (“[The FTC] really sweats the details about the effect on competition 

and the economic effect of what it’s doing. . . . [I]f you apply a market-based approach to consumer 

protection . . . that helps you in assessing the measurements.”). 

49 See WILSON, supra note 16, at 95. 

19
articulate principles or values to guide staff in carrying out the agency’s mission.50 These 

agencies make recurring efforts to relate these principles and values to the routine of 

selecting and implementing projects. These and other agencies have used a variety of 

innovative means to communicate their goals to their staff. Some involve regular 

communication through internal information conduits. Others take the form of special 

agency-wide events. Canada’s Competition Bureau and the OFT hold annual “town 

halls” attended by all of their personnel. Among other activities, these town halls provide 

an opportunity for senior management to review recent events and to spell out their vision 

for the way ahead. In 2008 the European Commission’s competition directorate held an 

“away day” in Brussels that assembled its entire staff for a similar event. 

The FTC today uses a variety of means to communicate its goals to its staff. 

These include regular announcements on the Commission’s intranet, periodic retreats for 

individual operating units, a yearly state of the Commission address delivered by the FTC 

Chairman, an annual awards ceremony, and other occasions that provide opportunities for 

senior leadership to explain the agency’s aims. Staff can watch Commission meetings in 

person, by teleconference, and over the Internet, and these provide guidance about the 

agency’s aims. Several times each year, the Commission holds meetings and seminars in 

Washington for smaller groups of its staff. Given the size of the FTC’s workforce and 

the distribution of staff geographically across the country, there would be considerable 

cost involved in following the practice of some foreign counterparts and having annual 

meetings of all personnel in Washington. Nonetheless, given the positive results that 

other agencies seem to achieve with their larger gatherings, the Commission might 

consider convening an agency-wide gathering every few years, or assembling all 

members of one of its principal operating groups (e.g., all administrators, attorneys, and 

economists who work, respectively, on competition or consumer protection matters). 

Short of these measures, ongoing efforts by the FTC to study innovations in internal 

communication undertaken by peer organizations promise to yield useful ideas for 

adoption inside the Commission. 

Beyond mobilizing its own employees, an agency also must enjoy support for its 

mission among external constituencies. Lack of external support for the mission can 

erode the perceived legitimacy of the agency’s individual actions, cause Congress to 

withdraw part of its jurisdiction, and, in extreme circumstances, call into question its 

continued existence. James Q. Wilson explains that for any agency leader, “a good 

strategy is one that identifies a set of tasks that are both feasible and supportable – 

 

50 See AUSTRALIA COMPETITION & CONSUMER COMMISSION, CORPORATE PLAN AND PRIORITIES 2008-09, at 

2 (2008), available at http://www.accc.gov.au/content/index.phtml/itemId/845527 (“We produce results in 

the public interest by: being accessible, transparent, independent and fair in our dealings with the 

community – including consumers, business and governments[; and] performing our role in a timely, 

effective, efficient and consistent manner that respects the confidentiality of information provided to assist 

us.”); Canadian Competition Bureau, Operational Principles, 

http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/h_00126e.html (identifying confidentiality, 

fairness, predictability, timeliness, and transparency as operational principles); U.K. OFFICE OF FAIR 

TRADING, ANNUAL REPORT AND RESOURCE ACCOUNTS 2006-07, at 67 (2007), available at

http://www.oft.gov.uk/shared_oft/annual_report/438243/hc532.pdf (identifying passion, trust, courage, and 

openness as organizational values). 

20
activities the organization has the capacity to engage in and that will elicit the support of 

important constituencies.”51 Political adroitness in building such support is every bit as 

important to the success of the FTC’s programs as technical proficiency. 

It is important to distinguish between support for a mission among internal and 

external constituencies over time, on the one hand, and unanimous support for specific 

agency actions, on the other. The former is necessary for a successful agency; the latter 

is not.52 As former Chairman Muris explained, “I think that what you need is some 

understanding of the core mission that has support amongst that constituency [staff, 

business, courts, academics, and peers in government], not just today, but over long 

periods of time and through electoral cycles.”53 Another way for the Commission to 

envision its work is that each of its initiatives accumulates political capital, expends 

political capital, or does both. To succeed over time, the FTC must monitor its political 

capital account. Ideally, the balance usually will be positive. The agency can function 

effectively with temporary, limited deficits – such as when it undertakes a program that 

initially involves serious political risks but promises to generate substantial positive 

economic returns to the economy. Substantial, chronic deficits are dangerous. 

From the external consultations for the self-study and from other assessments of 

the agency’s work, the FTC today appears to enjoy substantial support for its mission. 

As noted earlier, there appears to be widespread agreement that the FTC is properly 

focused on protecting consumers and promoting competition.54 Even those who have 

questioned whether the agency’s organic statute clearly defines the agency’s mission55

agree that the mission – as currently interpreted – has broad, bipartisan support.56 

Further, several panelists expressed the view that the FTC’s vague statutory language 

provides it with the flexibility to allocate resources to accomplish its mission of 

protecting consumers.57 The Commission’s modern custom of engaging in regular, 

extensive public consultations about a wide variety of its competition policy and 

consumer protection programs has provided an important, useful way to identify 

preferences of external groups and to build a consensus for its initiatives. 

To maintain a positive balance of political capital requires continuous effort from 

administrative agencies such as the FTC. As one political scientist has made the point, 

“each agency must constantly create a climate of acceptance for its activities and 

 

51 WILSON, supra note 16, at 208. 

52 See Muris, Principles, supra note 17, at 167 (having support of external constituencies for an agency’s 

mission “does not mean that the agency’s mission must be ‘popular’ or that the constituents must support 

every particular agency action”). 

53 Muris, 7/29 DC Tr. at 20. 

54 See supra notes 28-27 and accompanying text. 

55 See supra note 24. 

56 See Muris, 7/29 DC Tr. at 61 (remarking on the “continued bipartisan nature of this agency” and shared 

“sense of the core mission of the agency”). 

57 See Bernstein, 7/29 DC Tr. at 17; Luehr, Chicago Tr. at 24; T. Schwartz, Chicago Tr. at 30-31. 

21
negotiate alliances with powerful legislative and community groups to sustain its 

position. It must, in short, master the art of politics as well as the science of 

administration.”58 How the FTC can identify its core constituencies and continue to 

build support for its mission is discussed in greater detail in subsequent sections of the 

report. 

* * * 

 of 

ey can 

ternal support, the mission also must enjoy external support for the 

gency to succeed. 

ity 

g 

nd itself 

nderstood and supported by both the agency’s staff and external stakeholders? 

cipated 

ught 

tion of institutional 

ttributes to facilitate continuous adaptation and improvement. 

ne and 

ms,” 

 A key foundation for the FTC’s success is to articulate its mission clearly and to 

state its mission in terms that focus on the outcomes the Commission seeks to achieve for 

consumers. The ability to tie outcomes back to the mission facilitates the development

reliable performance measures. The FTC’s staff can be more effective when th

relate the results of their actions to the agency’s mission. When the FTC staff 

understands and supports a stated mission, Commission managers need spend fewer 

resources to motivate staff to pursue the agency’s aims. Even if a mission is outcomeoriented and enjoys in

a

These observations point to an important criterion by which we can determine 

whether the FTC is a “good” administrative body. Good performance begins with clar

and coherence in defining the Commission’s very purpose. The FTC is likely to be a 

more effective institution when it adopts a regular habit of asking itself the followin

questions: Has the Commission clearly defined its mission? Has the Commission 

defined its mission in a manner that focuses on the outcomes it hopes to achieve for 

consumers, rather than simply identifying the policy outputs – such as cases, reports, and 

rules – it intends to produce? Does the Commission’s definition of its mission le

to the formulation of measurable outcomes? Is the Commission’s mission well 

u

 The exercise laid out above is not a one-off event but an enduring imperative. 

From its formation in 1914, the Commission has operated in a dynamic environment. By

giving the Commission a broad, elastic charter and related powers, Congress anti

that the agency would evolve in the face of changing economic conditions, new 

commercial phenomena, shifting political currents, and developments in legal tho

and industrial organization economics. To perform this inherently evolutionary 

policymaking role, Congress gave the agency a distinctive collec

a

By embracing a routine habit of examining itself and its operations to defi

redefine its purpose, the Commission can engage in what two scholars of public 

administration, Richard Neustadt and Ernest May, have called “thinking in time strea

which consists of applying “the kind of mental ability that readily connects discrete 

 

58 FRANCIS ROURKE, BUREAUCRATIC POWER IN NATIONAL POLITICS 2 (1979). 

22
phenomena over time and repeatedly checks connections.”59 For the Commission, the 

connections that warrant close scrutiny are the links between its goals, its implementin

measures, and the outcomes that such measures produce for consumers. By checking 

those connections intensely, the FTC puts itself in the best possible position to answer

three basic questions that Neustadt and May single out as the core concerns of public

agency dec

g 

 the 

ision-making: “‘Will it work?’ ‘Will it stick?’ ‘Will it help more than it 

urts?’”60

 

h

59 RICHARD NEUSTADT & ERNEST MAY, THINKING IN TIME 252-53 (1986). Neustadt and May call this type 

of thinking “a special style of approaching choices, more the planner’s or the long-term program manager’s 

than the lawyer’s or judge’s or consultant’s or trouble-shooter’s.” Id.

60 Id. at 270. 

23
II. Agency Structure 

The structure of an administrative agency such as the FTC deeply influences the 

skill with which it carries out its responsibilities. Jurisdictions can achieve important 

gains in economic performance by pressing themselves to achieve an optimal regulatory 

design. There is growing recognition within the community of competition policy and 

consumer protection authorities that jurisdictions that improve the quality of regulatory 

outcomes at the lowest possible cost to society can realize a valuable source of economic 

advantage.61

Structure and organization can affect the performance of an agency’s priorities 

directly, for example, by having operational units dedicated to bringing specific types of 

cases or examining individual economic sectors, and indirectly, for example, by 

facilitating communication and coordination among agency components or having 

sufficient flexibility to address changes in rapidly transforming markets. Consumer 

protection and competition agencies around the world have a variety of structural 

designs. Some agencies have only competition or consumer protection enforcement 

authority. Others, like the FTC, combine the functions to meet a broader mission of 

protecting the marketplace for consumers. Among agencies with both functions, some 

organize their work along industry lines, while others divide along competition and 

consumer protection lines. Some agencies have a single commissioner or director, while 

others are led by a collegial body. Competition agencies, in particular, routinely include 

economists on their staffs, and there are different ways to incorporate economists’ input 

into agency decision making. 

This chapter examines how the design of the agency, integration of competition 

and consumer protection missions, communication, and the dual enforcement and 

adjudication functions affect achievement of the agency’s mission. 

A. Current Agency Design 

 

 The significant connection between institutional design and agency effectiveness 

has led many of the FTC’s counterparts overseas to undertake major efforts to determine 

whether adjustments in existing administrative structures and operational processes might 

yield superior results and whether the agencies have the components needed to serve their 

missions. As discussed in greater detail in Chapter III, this inquiry entails an assessment 

of whether the agency has the necessary human and physical resources to accomplish its 

mission. 

 For the FTC, a logical starting place for the analysis of structure is the 

composition of the FTC’s core leadership.62 The FTC is governed by a college of five 

 

61 This was a recurring theme in the comments of leaders of the FTC’s foreign counterparts. See, e.g., 

Fingleton, London Tr. at 53-62; Consultation with DG Comp, Oct. 23, 2008; Consultation with Conseil de 

la Concurrence, Oct. 23, 2008. 

62 Agency leadership is discussed in more detail in Chapter V.A. 

24
Commissioners, no more than three of whom may be members of the same political 

party.63 A fundamental legislative assumption supporting the FTC’s creation was that 

collective decision making would yield policy results superior to those attained by 

institutions governed by one official. 

From 1914 to 1950, the Commissioners selected their own Chairman, and from 

1916 to 1950 they rotated the position annually.64 In 1950, pursuant to Reorganization 

Plan Number 8, the President became responsible for designating a Chairman from 

among the sitting Commissioners. The Reorganization Plan contemplates an important 

allocation of labor among the members of the FTC and other administrative agencies. By 

this measure, the board is responsible for setting policy through, among other means, the 

selection of cases and the promulgation of rules. The Chairman serves as the agency’s 

executive and administrative head.65 The FTC was one of the first multimember federal 

agencies, and its model has since been adopted for numerous other federal agencies, as 

well as a significant number of foreign competition and consumer protection agencies.66 

The literature on the FTC and other administrative bodies identifies a number of 

conceptual benefits to multimember decision making. These include the application of 

diverse backgrounds to problem solving, the capacity of collective discussion to yield 

deeper insights into specific issues, and an increase in political legitimacy from having 

decisions taken by a board with varied political affiliations. It is also conceivable that, 

for purposes of performing various policy functions and reaching external constituencies, 

a multimember body can enjoy a form of multiplier effect. If a board can reach common 

cause concerning the agency’s mission and means of implementation, each member of 

the board can serve as a spokesperson and can reach audiences that a single administrator 

might not be able to address. 

How much the FTC and other administrative agencies have realized these and 

other benefits in practice is a matter of continuing debate. In the public consultations for 

this self-study, many participants spoke favorably about the multimember government 

structure. Former Chairman Robert Pitofsky endorsed the five-commissioner design in 

these terms: 

You could argue theoretically in favor of a single 

Commissioner structure, or perhaps three Commissioners, 

or five, or even seven. The advantage of a multiCommissioner structure, and the limitation that only three 

may come from the same political party, generally ensures 

a variety of views. Beyond theory, my impression is that in 

 

63 15 U.S.C. § 41. 

64 See generally Marc Winerman, History through Headlines, 72 ANTITRUST L.J. 871, 873 (2005). 

65 Reorganization Plan No. 8 of 1950, 15 Fed. Reg. 3175. 

66 Competition and consumer agencies with a collegiate structure include, among others, the Australia 

Competition and Consumer Commission, the Competition Commission of Singapore, the Korea Fair Trade 

Commission, the Taiwan Fair Trade Commission, and the Japan Fair Trade Commission. 

25
recent years (maybe not before 1970) the FTC has been a 

collegial body in which members worked together well and 

profited from their colleagues’ views. I would leave the 

arrangement as it is.67

Panelists expressed the view that the nature and political balance of the body of 

Commissioners fosters discussion of new ideas and provides restraint on the political 

agenda of the agency. Former Commissioner Thomas Leary emphasized the benefits of a 

collegial body and urged more discussion among Commissioners: 

I think [the FTC] can make and should make greater use of 

the ability of the Commission to function collegially 

because the Commissioners ultimately are the people who 

are going to have to set policy and make these decisions. . . 

. In [the Office of Policy Planning] operation [] there were 

these background papers being prepared which were going 

to be used in support of the Commission’s advocacy role. 

And we met simply to discuss these various drafts of 

positions that the Commission might take on important 

matters of competitive policy, the extent of the state action 

exception and things of that kind. And it was not in the 

discussion of a particular case or it was not in the 

discussion of a particular Congressional hearing, it was 

simply to see if we could agree among ourselves on what 

the Commission’s policy ought to be ultimately when these 

things arise. And I thought that that was tremendously 

innovative and a very useful way of making use of the 

collective wisdom, if you will, of the people who have been 

appointed to run this place.68

As the remarks of these former Commission members indicate, the logic of 

multimember governance assumes extensive interaction among the members of the 

board. Communications among Commissioners may take place informally or, more 

formally, through meetings. The Sunshine Act imposes significant restrictions on how 

these gatherings can take place and what number of Commissioners can participate.69 In 

general terms, the Sunshine Act imposes constraints on actions by a quorum of 

Commissioners. These limits normally apply to communications among three or more 

Commissioners. When a combination of vacancies or recusals leaves only three 

Commissioners eligible to participate in a matter, the Sunshine Act limits 

communications between any two members. 

 

67 Conversation with Muris and Pitofsky, supra note 27, at 849. 

68 Leary, 7/29 DC Tr. at 38-39. 

69 5 U.S.C. § 552b. 

26
 The Sunshine Act has major implications for how Commission members interact. 

Consider the circumstance where all five members of the board are eligible to participate 

in a matter. In effect, the Sunshine Act forestalls all spontaneous discussion by more 

than two members of the Commission about most matters of agency business, including 

such items as pending law enforcement matters. For example, if two Commission 

members who happen to be engaged in a conversation about a proposed case are joined 

by a third Commissioner, the discussion about Commission business must cease. 

Discussions involving three or more Commissioners concerning agency business can take 

place only if notice of such gatherings is made public in advance. The noticed meetings 

must be opened to the public unless the subject matter satisfies one of several Sunshine 

Act exceptions (which allow, for example, the closure of meetings involving proposed 

law enforcement measures). As a consequence, much communication among 

Commissioners about agency business takes the form of seriatim, two-by-two 

conversations. These are prone to all of the difficulties in comprehension and 

interpretation that accompany the sequential transmission of information from one person 

to a second, and then to another. The Sunshine Act’s limits do not apply to agents of the 

Commissioners. It is common practice for advisors of the Commissioners to meet as a 

group to discuss matters of agency business and, in many cases, to formulate common 

understandings on behalf of their principals. 

 Officials from foreign agencies with the multimember commission governance 

structure find the Sunshine Act restrictions astonishing. Their intuition is that limitations 

severely impede the application of the collaborative decision-making processes that are a 

major rationale for the design of a multimember governance system. They raise a 

fundamental question about administrative practice in the United States: It is not evident 

how the benefits of collective governance that appeared to animate the creation of the 

FTC can be realized if the existing limits of the Sunshine Act are unchanged. The FTC’s 

experience, especially compared to that of its foreign counterparts, leads one to ask 

whether the costs to the quality of deliberation among Commissioners exceed the benefits 

of public transparency.70 The possible modification of the statute would appear a worthy 

topic for discussion between the Commission and the Congress in the years to come. 

Within the constraints of the Sunshine Act, the Commission has used a number of 

approaches to discuss larger issues of policy that arise outside the context of specific law 

enforcement actions. The Commission recently revived a practice, used from 1977 to 

1982, of holding “policy review sessions,” at which the Commission, with the help of 

staff, gathers and discusses how the Commission wants to proceed on particular issues.71 

Even with this method of discourse, the agency must place an account of the discussions 

in the public domain, subject to the redaction of material involving certain law 

enforcement matters. The effort among Commissioners to discuss sensitive topics in this 

format can be challenging. 

 

70 Leary, 7/29 DC Tr. at 39. See also Bernstein, 7/29 DC Tr. at 42-43. 

71 See Kovacic, 7/29 DC Tr. at 45-46 (discussing earlier sessions). 

27
 Panelists in the consultations for the FTC self study did not discuss the 

qualifications of the individuals selected to be Commissioners and other senior agency 

officials. Commentators have focused extensively on this issue throughout the FTC’s 

history.72 Most recently, the ABA Section of Antitrust Law’s 2008 Transition Report 

recommended that the incoming administration appoint competition officials who have 

relevant substantive antitrust expertise and who seek involvement in the administration’s 

shaping of economic policy.73 In a discussion that addressed appointments to the FTC 

and to the Department of Justice (“DOJ”) Antitrust Division, the ABA Transition Report 

stated: 

[T]he continued appointment of such knowledgeable 

individuals, who will be best positioned to gain the respect 

of the career staff at the agency, the private bar, [and] the 

business community . . . can lead to better [staff] morale, 

more credible enforcement decisions, and a greater ability 

for the agencies to engage with the private sector regarding 

substance and process in ways that improve enforcement 

overall. Such officials also would have the stature and 

reputations necessary to gain the respect of, and engage 

effectively with, enforcers around the world. . . . With such 

credibility, agency leadership also may have some success 

in obtaining opportunities to provide valuable input 

regarding antitrust and consumer protection to economic 

policymakers in the new Administration.74 

 The discussions with foreign competition and consumer protection agencies 

identified a noteworthy respect in which the pattern of appointments to the FTC departs 

from the practice of appointments overseas. Many of the heads of foreign competition 

and consumer protection agencies are economists. Only once in the FTC’s history has an 

economist (James C. Miller III) served as the Chairman. Only three individuals with 

doctorates in economics (Miller, George Douglas, and Dennis Yao) have been FTC 

Commissioners. Accounting for trends in international practice and reflecting on the 

substantial economic dimension of the FTC’s charter, it is reasonable to ask whether the 

agency is well served by such infrequent participation by economists at the top 

management level of the agency. 

Below the Commissioner level, the FTC has three bureaus broadly divided along 

mission lines,75 seven regional offices (one of which has two branches), and several other 

 

72 This commentary is reviewed in William E. Kovacic, The Quality of Appointments and the Capability of 

the Federal Trade Commission, 49 ADMIN. L. REV. 915 (1997) [hereinafter Kovacic, Quality]. 

73 ABA TRANSITION REPORT, supra note 11, at 11-12. 

74 Id. 

75 By comparison, the Australia Competition and Consumer Commission, which enforces consumer 

protection and competition laws and also has regulatory responsibilities for national infrastructure 

industries such as telecommunications, energy, water, and transportation, organizes some of its work along 

28
offices, most prominently, in terms of size, the Office of the General Counsel and the 

Office of the Executive Director. 

The Bureau of Competition (“BC”) focuses primarily on enforcement of the FTC 

Act’s prohibition of unfair methods of competition in the realm of antitrust and other 

competition laws. BC is divided into nine divisions: four divisions, organized around 

sectoral lines, specialize in merger enforcement; one handles health care-related 

competition concerns, including but not limited to mergers; one focuses on 

anticompetitive practices; one oversees compliance with orders issued in administrative 

or court cases brought by the Commission; one focuses on premerger notification; and 

one focuses on competition policy. 

The Bureau of Consumer Protection (“BCP”) attends to the FTC’s mission 

concerning the FTC Act’s prohibition of unfair or deceptive acts or practices in or 

affecting commerce. BCP has seven divisions, five of which focus on direct law 

enforcement and compliance. Those divisions work in the areas of national advertising; 

financial practices; deceptive marketing of goods and services; privacy and identity 

protection; and enforcement of outstanding Commission and judicial orders, certain trade 

regulations and rules, and other targeted initiatives, such as green marketing. The other 

two divisions focus on support for BCP programs. One provides litigation support, data 

sharing (through the Consumer Sentinel Network) and analysis, and management of the 

Consumer Response Center, which responds to consumer complaints; the other division 

implements the Commission’s expansive consumer and business education programs. 

The agency’s seven regional offices engage in consumer protection and 

competition enforcement under BCP and BC oversight. One of those offices, the 

Western Regional Office, has branches in two cities (Los Angeles and San Francisco). 

The Bureau of Economics (“BE”) supports both the competition and consumer 

protection enforcement work of the bureaus and carries out much of the agency’s 

research mission. BE has two groups that focus on antitrust matters and one that focuses 

on consumer protection matters. It also has an office of applied research and outreach, 

which coordinates BE’s policy R&D, advocacy, and international activities, as well as an 

office of accounting and financial analysis, which focuses on mergers and other 

competition issues. The Commission has always assigned its economists to a separate 

unit and, from that unit, the economists provide independent economic advice to the 

Commissioners. 

The Office of General Counsel represents the Commission in appellate matters 

and certain types of court actions, consults with or advises the bureaus on other court 

actions, and assists the Justice Department in representing the Commission in cases 

within the DOJ’s purview. The office includes a Policy Studies shop that prepares 

comprehensive reports on vital legal issues and on major sectors of the American 

 industry lines (such as the work related to regulated sectors and price surveillance). Similarly, the 

European Commission’s DG Comp has engaged in a widespread reorganization into sector-specific project 

groups (excluding cartels). 

29
economy, as well as a Legal Counsel shop that provides legal services to the entire 

agency concerning such matters as agency jurisdiction, rulemaking authority and 

procedures, employment law, government ethics, agency regulatory obligations, and 

information disclosure. 

 

 Several other offices perform additional functions that support the Commissioners 

and bureaus. These include the Office of International Affairs (“OIA”); the Office of 

Policy Planning (“OPP”); the Office of Public Affairs and the Office of Congressional 

Relations (both attached to the Chairman’s office); the Office of the Executive Director; 

and the Office of the Secretary. The Office of the Administrative Law Judges includes 

the Commission’s Administrative Law Judges (“ALJs”), who preside at trials at the 

direction of the Commission. The Office of the Inspector General (“IG”), an independent 

office within the Commission, conducts audits and investigations relating to the programs 

and operations of the FTC. The IG conducts audits to find and prevent fraud, waste, and 

abuse and to promote economy, efficiency, and effectiveness within the agency. 

From approximately 1954 to 1960, the FTC divided its staff into bureaus along 

functional lines, one consisting of investigational staff and the other consisting of trial 

staff.76 After 1960, the agency was reorganized into, among other units, a Bureau of 

Restraint of Trade and a Bureau of Deceptive Practices.77 In 1970, under the leadership 

of Chairman Caspar Weinberger, the agency renamed the operating bureaus to their 

current titles of the Bureau of Competition and the Bureau of Consumer Protection, 

respectively.78 Divisions within BC and BCP have both investigative and litigation 

responsibilities in particular subject matter areas.79 Following the structural changes in 

the early 1970s, a number of commentators have noted that the budget for the Bureau of 

Consumer Protection substantially increased and BCP focused more heavily on matters 

of greater importance to consumers.80 Likewise, the restructured Bureau of Competition 

is regarded as having become more effective and made great inroads in antitrust 

enforcement.81 Also, one commentator stated that, after the restructuring of the early 

1970s, the FTC was able to recruit more skilled attorneys than it had previously.82

 On the whole, the FTC’s current structure of operating units has worked well. 

The external consultations with foreign agencies revealed many instances in which other 

 

76 See ROBERT A. KATZMANN, REGULATORY BUREAUCRACY: THE FEDERAL TRADE COMMISSION AND 

ANTITRUST POLICY 113 (1980); FTC, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE 

FISCAL YEAR ENDING JUNE 30, 1954, at 7-8 (1955), available at

http://www.ftc.gov/os/annualreports/ar1954.pdf. 

77 KATZMANN, supra note 76, at 113. 

78 Id. at 114-15.

79 Id. 

80 KENNETH W. CLARKSON & TIMOTHY J. MURIS, THE FEDERAL TRADE COMMISSION SINCE 1970:

ECONOMIC REGULATION AND BUREAUCRATIC BEHAVIOR 63 (1981). 

81 Id. at 61-62. 

82 KATZMANN, supra note 76, at 116. 

30
countries have made organizational changes that directly have emulated features of the 

FTC’s existing organization or have been influenced by the FTC’s experience. 

More important than the FTC’s organization at any one time has been the 

development of a healthy custom that promotes reassessment and adjustment of existing 

organizational arrangements in light of past experience and emerging needs. When this 

process has identified possibilities for useful modifications, the FTC’s administrative 

structure and its organization of bureaus have proven to be highly adaptable and flexible. 

New divisions or other subunits can be, and have been, created in response to changes in 

marketplace conditions or perceived agency needs. 

Four recent examples illustrate how the agency has upgraded its structure in order 

to carry out its mission more effectively. In 2004, BCP established a Criminal Liaison 

Unit (“CLU”) to work with federal and state law enforcers to facilitate criminal 

prosecution of pernicious forms of fraud. In 2006, the Commission established the 

Office of International Affairs, mentioned above, to improve the coordination of 

international matters within the agency and to provide a clearer focal point for contact by 

the FTC’s foreign counterparts. In 2007, the agency altered BCP to form the Division of 

Privacy and Identity Protection out of the Division of Financial Practices. This move has 

enabled the FTC better to address consumer-related financial-privacy concerns, while 

also improving the focus on the issues that remained in the Division of Financial 

Practices. In 2008, the Bureau of Economics established a research unit to oversee BE 

research that will have impacts across all areas of enforcement. Short-term needs, 

moreover, can be met without restructuring, such as when attorneys from one BC 

division are assigned to work on another division’s projects when the ebb and flow of 

work calls for such assignment. 

 

 One roundtable panelist expressed a cautionary note for any agency considering 

changing its structure, observing that when agency restructuring takes place, the agency 

should seek to resolve existing problems, rather than relocating problems from one 

division to another. He explained: 

What you’re striving for, I think, in terms of performance is 

more about building capacity and capacity to do the old 

things in very new, different, agile and better ways. So, I 

think you have to think about it in those terms. And in 

some cases, it’s going to be about doing new things that 

need to be done, as well, things you may not have done in 

the past. But, again, traditional restructuring is not going to 

eliminate those problems. It’s not going to prevent them 

from reoccurring. The restructuring kind of remedy, again, 

simply relocates problems from one division or one bureau 

or one segment to another. It really is not the solution.83 

 

83 Breul, 7/30 DC Tr. at 14. 

31
This comment correctly points out that reorganization by itself cannot solve deeper 

systemic problems that afflict an organization. Reorganization for its own sake also can 

breed cynicism among career professionals who have watched a long series of new 

agency managers alter the organization chart in ways that yielded few enduring 

improvements in the FTC’s performance. 

At the same time, attentiveness to possibilities for structural enhancements can 

lead an agency to solve problems that are rooted in organizational flaws and can help turn 

even good programs into great programs. This is another area in which the 

Commission’s efforts to benchmark itself with other agencies at home and abroad can be 

highly useful. Conversations with other federal regulatory commission officials during 

the course of the FTC self-study revealed that, even though the federal commissions 

confronted many of the same operational challenges, sharing across commissions about 

past experience was unusual. This is an area in which interagency cooperation, either 

informally or within the framework of a memorandum of understanding, could help the 

FTC and other federal commissions share know-how that would improve the 

performance of all. 

The same can be said of foreign competition and consumer protection agencies. 

Many foreign authorities are engaged in exciting experiments with new forms of 

organization and new techniques for operational practice. Careful study of the 

experiences of foreign agencies with comparable mandates could enable the FTC to 

identify potentially useful modifications to its own arrangements. The potential benefits 

from interagency information sharing warrant the FTC’s efforts to see that multinational 

organizations that address competition or consumer protection issues expand the attention 

they give to questions of agency organization and operations. 

B. Looking Ahead: Significant Issues Involving the FTC’s Structure and 

Operations 

The FTC’s self-study consultations demonstrated that organizational adaptability 

and an ethic of continuous institutional improvement are major characteristics of good 

agency performance. As the discussion above indicates, a useful way to strengthen the 

agency’s effectiveness is to sustain the modern custom of refining the agency’s structure 

and operations. As they have in the past, the Commission and its operating units can best 

achieve needed refinements through a regular, continuous process of assessment through 

which the Commission and its operating units – using such means including budgeting 

exercises, leadership retreats, and benchmarking with other institutions – seek to identify 

possibilities for improvement. 

In this section we present several focal points for refinement. One involves the 

integration of competition and consumer protection missions within a single agency. A 

related issue, which the dual mission especially implicates, is communication and 

coordination across agency components. This is particularly important for the 

nonenforcement activities of the agency, which can be effective tools to shape policies 

32
across practice disciplines. A further significant structural issue is the proper role of 

administrative adjudication in the agency. 

1. Integration of Competition and Consumer Protection 

Because the core mission of the FTC is to protect consumers by ensuring that 

markets work well, the agency must assess how a government agency can aid consumers 

and the market through its actions. The ABA Transition Report recently observed, 

“Given our free market economy, antitrust and consumer protection should be recognized 

as critical parts of any administration’s economic policies, and new agency officials 

should not be shy about contributing to discussions surrounding such policies.”84

Shared authority is a common condition of the FTC’s competition and consumer 

protection missions. The Department of Justice has jurisdiction to enforce the antitrust 

laws, and agencies such as the Consumer Product Safety Commission, the Federal 

Communications Commission, the Food and Drug Administration, and the Federal 

Reserve Board have jurisdiction over some consumer protection laws. However, the dual 

missions that fall under the “unfair or deceptive acts or practices” and “unfair methods of 

competition” standards within the FTC Act make this agency particularly well suited to 

address the interplay between consumer protection and competition.85 The 

Commission’s capacity to meld expertise in economics, competition, and consumer 

protection is a conscious element of its institutional design and a major reason for its 

existence.86 

 

Former Chairman Muris has described the dual missions as complementary 

elements of the same mission: “The policies that we traditionally identify separately as 

‘antitrust’ and ‘consumer protection’ serve the common aim of improving consumer 

welfare and naturally complement each other.”87 This is because “competition presses 

 

84 ABA TRANSITION REPORT, supra note 11, at 12. 

85 Foreign authorities that have a dual competition and consumer protection mandate include the Australia 

Competition and Consumer Commission, the Korea Fair Trade Commission, Colombia’s Superintendence 

of Industry and Commerce, the Jamaican Fair Trade Commission, Peru’s National Institute for the Defense 

of Competition and the Protection of Intellectual Property, Poland’s Office for Competition and Consumer 

Protection, the Taiwan Fair Trade Commission, and the U.K. Office of Fair Trading. 

86 See Peeler, 7/30 DC Tr. at 134. 

87 Timothy J. Muris, The Interface of Competition and Consumer Protection, Prepared Remarks at The 

Fordham Corporate Law Institute’s Twenty-Ninth Annual Conference on International Antitrust Law and 

Policy, at 3 (Oct. 31, 2002), available at http://www.ftc.gov/speeches/muris/ 021031fordham.pdf. With 

reference to the Commission’s unfairness jurisdiction, traditionally the most expansive part of its consumer 

protection jurisdiction, Muris gave some examples that show how a choice analysis can work: “The 

primary purpose of the Commission’s unfairness authority is to protect consumer sovereignty by attacking 

practices that impede consumers’ ability to make informed choices. Consumer sovereignty may be 

frustrated ex ante if, for example, important information is not provided. See Labeling and Advertising of 

Home Insulation, Statement of Basis and Purpose, 44 Fed. Reg. 50218 (1979). It may be frustrated ex post 

if sellers do not honor their contracts with consumers. See Orkin Exterminating Co., 108 F.T.C. 263 

(1986), aff’d sub nom, FTC v. Orkin, 849 F.2d 1354 (11th Cir. 1988). The three-part unfairness test – the 

injury must be (1) substantial, (2) without offsetting benefits that outweigh the harm, and (3) one that 

33
producers to offer the most attractive array of price and quality options,” and “consumer 

protection works to ensure that consumers can make well-informed decisions about their 

choices and that sellers will fulfill their promises about the products they offer.”88 

Former Commissioner Leary has described the two missions as complementary missions 

that address distortions to the supply side of the market in the case of competition and 

distortions to the demand side in the case of consumer protection.89

The FTC self-study consultations abroad revealed similar perspectives. Sir John 

Vickers, the former Chief Executive of the U.K. Office of Fair Trading, observed, 

“Consumer policy and competition policy are logically and institutionally intertwined.”90 

Vickers described consumer policy as addressing issues of consumer duress and undue 

pressure, prepurchase information problems, and undue surprises postpurchase, and he 

described competition as a means to mitigate these problems.91 

A recent symposium on the interplay between competition and consumer 

protection policies also focused on the integration of these two disciplines.92 The 

interplay between the two is widely recognized and takes many forms. For example, 

some authors have suggested that competition benefits consumers by driving all 

information (including adverse information) out into the open under what has historically 

 consumers cannot reasonably avoid – specifically is designed to provide a rational, empirical means to 

determine whether the challenged acts or practices interfere with consumers’ ability to make choices.” Id.

at 5 n.10. 

88 Id. at 3, 4 (“Competition cannot work effectively unless customers are reasonably well informed about 

the choices before them. Uninformed choice is not effective choice, and without that there will not be 

effective competition. Informed choice has two elements − knowing what alternatives there are, and 

knowing about the characteristics of alternative offerings. In particular, what matters is the ability of 

customers to judge the prospective value for money, for them, of the alternatives on offer.”). 

89 Thomas Leary, Competition Law and Consumer Protection Law: Two Wings of the Same House, 72

ANTITRUST L.J. 1147, 1148 (2005). 

90 John Vickers, FBA, Economics for Consumer Policy, British Academy Keynes Lecture, at 1 (Oct. 29, 

2003), available at http://www.oft.gov.uk/shared_oft/speeches/spe0403.pdf. Vickers observed: 

Competition is pro-consumer for the simple reason that rivalry among 

suppliers to serve customers well is good for customers. In such 

rivalry, the suppliers who serve customers best will prosper and those 

that serve them poorly will not. By the incentives that this process 

gives to all firms, and by selecting the better from the poorer, efficiency 

and productivity in the economy as a whole are promoted. This is 

productivity in the properly consumer-oriented sense of Adam Smith: 

“Consumption is the sole end and purpose of all production; and the 

interest of the producer ought to be attended to only so far as it may be 

necessary for promoting that of the consumer.” 

Id. at 4-5 (citing Adam Smith’s Wealth of Nations).

91 Id. at 2-4. 

92 See Paul A. Pautler, Consumer Protection Policies, Economics, and Interactions with Competition 

Policy, 4 COMPETITION POL’Y INT’L 83 (2008). 

34
been called the unfolding principle.93 This happens only if the information is not too 

expensive and if consumers demand it.94 

Discussion today about dual-purpose agencies with competition and consumer 

protection portfolios focuses heavily on what form of intervention serves to maximize 

consumer welfare. One author observes that, although competitive markets generally 

provide consumer protection solutions without government intervention, in some markets 

consumer welfare is not maximized despite a high level of competition.95 For example, 

markets in which some groups of consumers bear the costs of other consumers being 

either over- or underinformed, as well as competitive markets in which additional 

competitors bring new information that adds to consumer search costs in sifting both new 

information and avoiding deceptive claims, may be instances in which competition does 

not actually maximize overall consumer welfare.96 The author suggests that public 

intervention could require certain disclosures that would foster price and quality 

transparency and correct for identified information gaps.97 He qualifies this policy 

suggestion with the admonition that any such policy should be implemented only after 

rigorous study and cost-benefit analysis confirms that such intervention would benefit 

consumers.98

 In asserting that competition and consumer protection policy serve the same 

purpose, former BCP Director William MacLeod has explained the distinction as being 

one of technical form: competition policy seeks to maximize consumer choices while 

consumer protection “seeks to ensure that customer choices . . . are not distorted by 

deception, misstatements or mistreatment of customers.”99 This presents challenges in 

aligning the two policy areas, and agencies need to make the effort to ensure that 

competition and consumer protection policy actions do not run counter to one another.100

MacLeod states that this ultimately can be achieved when both disciplines place emphasis 

first on consumer interests, without taking away the primary focus of competition policy 

as protecting competition and not competitors.101

 

93 Id. at 87 (citing Howard J. Beales, III, Consumer Protection and Behavioral Economics: To BE or not to 

BE?, 4 COMPETITION POL’Y INT’L 149 (2008); Paul H. Rubin, Regulation of Information and Advertising, 4 

COMPETITION POL’Y INT’L 169 (2008)). 

94 Id. 

95 Mark Armstrong, Interactions between Competition and Consumer Policy, 4 COMPETITION POL’Y INT’L

97, 102-12 (2008). 

96 Id. at 112. 

97 Id. at 112-25. 

98 Id. at 144. 

99 William MacLeod, The Interface between Competition and Consumer Policies, Contribution from BIAC, 

OECD Global Forum on Competition, at 3 (Feb. 13, 2008), available at

http://www.oecd.org/dataoecd/31/56/40080545.pdf. 

100 Id. 

101 Id. at 6-7. 

35
Roundtable panelist Sir Jeremy Lever suggested that consumer protection follows 

as a result of competition policy, and although competition and consumer protection are 

not the same discipline, competent competition agencies may enforce both laws.102 

Lever cited Muris, who has written that the same government agency need not 

necessarily handle competition and consumer issues; “[c]ompetition and consumer

protection agencies, however, should recognize the complementary nature of their 

missions. Around the world, this recognition is growing.” ote 

ssion 

 

103 A recent background n

for an Organization for Economic Cooperation and Development (“OECD”) discu

examined the tension that exists in comparing the intellectual underpinnings of 

competition and consumer protection policies: 

That consumer protection policy and competition policy are 

largely interdependent instruments of economic policy, 

both aimed at serving a common purpose of enhancing the 

efficiency with which markets work, has been stated on 

many occasions and is widely accepted. It is also widely 

recognized that there can be, and at times are, tensions 

between those policies. Moreover, as a practical matter, 

there are differences in how those policies work, and in the 

nature of the process by which decisions are taken and 

implemented. Recognition of these interdependencies and 

of the differences leads naturally to a consideration of the 

institutional arrangements for these policies and 

specifically, of how they should be coordinated.104

A key inquiry for an FTC self-assessment is what level of integration of 

competition and consumer protection activities should exist to best achieve the agency’s 

overall mission. On this question, a former bureau director and a former deputy director 

both suggested that the FTC has a way to go and that the bureaus are too much like 

“silos” – that is, they operate side by side, but do not interact with each other 

sufficiently.105 To resolve this, former BCP Director Jodie Bernstein suggested that BE 

take the lead in identifying issues that may involve both of the other bureaus and that an 

ad hoc group could be formed to address such issues and come back to the Commission 

with a recommended course of action.106 Similarly, former OPP Director Susan DeSanti 

urged that the Commission establish a centralized structure, such as a policy office, to 

coordinate the research and policy development taking place in the three bureaus.107 In 

102 Lever, London Tr. at 137. 

103 Muris, Principles, supra note 17, at 174. 

104 Henry Ergas, The Interface between Competition and Consumer Policies, OECD Background Note, 

OECD Global Forum on Competition, at 3 (Jan. 24, 2008), available at

http://www.oecd.org/dataoecd/25/28/39890230.pdf. 

105 Bernstein, 7/29 DC Tr. at 43; T. Schwartz, Chicago Tr. at 90. 

106 Bernstein, 7/29 DC Tr. at 37-38. 

107 DeSanti, 7/29 DC Tr. at 128-30. 

36
2007, the FTC did this for international work, integrating the international competition, 

consumer protection, and technical assistance functions into the Office of International 

Affairs.108

The experience of foreign counterparts with integration of competition and 

consumer protection functions may prove useful for the FTC.109 At least 30 agencies 

worldwide have a mix of these duties. Compared to the FTC, some dual-mandate 

agencies have undertaken more expansive organizational measures to integrate the 

competition and consumer functions more completely. The most notable is the U.K.’s 

Office of Fair Trading, which in 2006 restructured itself to integrate the agency’s 

competition and consumer protection investigative and policy divisions, with staff 

responsible for both competition and consumer protection matters. Consultations with 

the OFT suggest that the integration of functions has led to greater consistency in 

outcomes and better use of available tools, with clear benefits in the areas of market 

studies and behavioral economics in particular.110 Other agencies such as the Australian 

Competition and Consumer Commission integrate competition and consumer policy in 

divisions with specific sector responsibilities. The Canadian Competition Bureau 

integrates competition and consumer protection by rotating staff between the competition 

and consumer protection divisions. Equally important is to examine the agencies moving 

away from integration, including the experience of the European Commission, France, 

India, and Japan, where the agencies separated (or are in the process of separating) their 

consumer protection and competition functions, maintaining linkages only at a policy 

level rather than at an operational level.111 

 

108 OIA was established on January 2, 2007. It brought together the functions and personnel formerly in the 

International Antitrust Division of the Bureau of Competition, the Division of International Consumer 

Protection of the Bureau of Consumer Protection, and the International Technical Assistance Office of the 

Office of the General Counsel. The OIA Director reports directly to the Chairman and works closely with 

all of the FTC’s component organizations. OIA has three Deputy Directors, who are responsible for the 

international antitrust, consumer protection, and technical assistance functions. 

109 The FTC took a leadership role in the multilateral discussion on this topic at a February 2008 OECD 

meeting. Submissions for this discussion are available at 

http://www.oecd.org/dataoecd/22/34/40898016.pdf. In-depth FTC submissions to earlier OECD programs 

on the linkages between competition and consumer policy are available at 

http://www.ftc.gov/bc/international/docs/US%20FTC%20paper%20on%20identifying%20and%20tackling

%20dysfunctional%20markets.pdf and http://www.ftc.gov/bc/international/docs/CompConsumerPro%20jnt%20rndtbl_2003%20Oct_US%20paper.pdf. At the Paris roundtable, Zoltan Nagy 

encouraged the FTC to do more technical assistance in the area of the interface of competition and 

consumer policy. Nagy, Paris Tr. at 45. 

110 Consultation with OFT, Sept. 11, 2008. 

111 For example, as noted above, the European Commission has separate directorates for competition (DG 

Comp) and consumer protection (DG SANCO). This largely reflects the underlying arrangements in most 

member countries, in which the consumer and competition authorities are separate. The two directorates 

do, however, coordinate on policy issues, including issues such as e-commerce and consumer redress. See, 

e.g., Hon. Meglena Kuneva, European Commissioner for Consumer Protection, Consumer and Competition 

Policies – Both for Welfare and Growth, Address before OECD Global Forum on Competition (Feb. 22, 

2008), available at

http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/95&format=HTML&aged=1&langu

age=EN&guiLanguage=en. 

37
 Regardless of the variety of arrangements throughout the world, the FTC’s dualfunction structure is a core component of its existence. The FTC in some ways may be a 

leader in both of these areas. Continuing, useful focal points of the agency’s attention in 

the years ahead include (1) whether the dual missions are adequately integrated among 

the leaders and staff of the agency, and (2) ways to improve such integration. In 

additional to its own internal review, there will be much for the FTC to learn from the 

experience of agencies such as Canada’s Competition Bureau and the OFT, both of which 

have undertaken ambitious measures to integrate the two functions. 

2. Coordination and Communication throughout the Agency 

A longstanding concern of students of public administration is the skill with 

which the individual components of an institution share information with each other and 

otherwise coordinate their activities. The need to achieve effective intra-agency 

information flows and cooperation is a matter of particular importance for the FTC. 

Among other reasons, this is a function of the Commission’s dual-purpose mission and its 

portfolio of research capabilities and other policy instruments that may be used by 

multiple agency units. Whether the agency is consistent in communicating the central 

tenets of the competition and consumer protection missions to agency staff and to outside 

stakeholders is an indicator of its likely success in achieving its mission. 

Foreign counterparts to the FTC have developed innovative mechanisms to 

encourage internal information sharing. For example, the U.K. Office of Fair Trading 

has a central “Know-How” team to disseminate agency research, policy efforts, and other 

work. The OFT also uses a “knowledge sharing board,” which consists of a public folder 

in all staff inboxes where staff can post inquiries to determine who at the agency has 

worked in particular areas or to obtain sample work product from their colleagues.112

 Panelists identified industry self-regulation as an area in which competition and 

consumer protection interests will inevitably intersect and where cross-bureau 

communication may considerably help in obtaining beneficial policy results.113 

Assessment of the competitive restraints that may flow from self-regulation often turns 

on the legitimacy and importance of the consumer protection interest that produced the 

self-regulatory initiative. The FTC – given the dual nature of its mission – is in a unique 

position to balance the competing interests and promote self-regulation that fulfills the 

consumer protection need without unnecessarily harming competition. 

 Panelists also discussed ways to integrate the agency’s disciplines through 

bureaus and offices outside the Bureau of Competition and the Bureau of Consumer 

Protection. For example, former BCP Deputy Director Teresa Schwartz recommended 

that the role of economists in the area of consumer protection should be more pronounced 

 

112 Consultation with OFT, Sept. 11, 2008. 

113 See MacLeod, 7/30 DC Tr. at 190-93; Peeler, 7/30 DC Tr. at 166, 193-94. 

38
in practice, if not in the structure of the agency.114 She also suggested that the FTC 

would benefit from improving its economic tools and analysis with respect to consumer 

behavior and the application of behavioral economics.115 

These suggestions are consistent with those made by other commentators who 

encourage more integration of economists in agency activities. In a recent article, former 

BE Director Luke Froeb, current BE Deputy Director Paul Pautler, and former EC Chief 

Competition Economist Lars-Hendrik Röller discussed the importance of integrating and 

employing BE’s tools in agency decision making at all levels.116 They note that the FTC 

is a functional organization, meaning that it is divided by certain subject areas to 

maximize economies of scale.117 The FTC hires specialized econometricians to analyze 

specific problems and relies on staff economists to provide critiques and assessments of 

cases, as well as to undertake ongoing research.118 The authors posit that the 

disadvantage of this design is in its potential impact on coordination between lawyers and 

economists, which can be fixed with stronger horizontal contacts across practice areas.119 

They concluded that including economists in communication throughout the agency is 

essential in coordinating enforcement and policy decisions.120 Much as Bernstein and 

Schwartz said, Froeb, Pautler, and Röller also suggested that incorporating economists 

into the mainstream workings of the agency both fosters high-quality economic analysis 

and promotes better communication of that analysis to the agency decision makers.121 

 Panelists also addressed the diversity of policy offices across the agency. Susan 

DeSanti, former Director of Policy Planning and then Deputy General Counsel for Policy 

Studies within the Office of General Counsel, explained that there are reasons for the 

existence of each policy office and that each one does slightly different things.122 For 

example, some decentralization may ensure that policy work is more directly related to 

 

114 T. Schwartz, Chicago Tr. at 54-56. 

115 Id.

116 See Luke M. Froeb, Paul A. Pautler & Lars-Hendrik Röller, The Economics of Organizing Economists

(Vanderbilt Law and Economics Research Paper No. 08-18, 2008) (forthcoming 2009 in Antitrust Law 

Journal), available at http://ssrn.com/abstract=1155237. 

117 Id. at 8-9. 

118 Id. 

119 Id. at 12. 

120 Id. at 4-5. 

121 Id. Until recent years, the FTC’s Bureau of Economics had a relatively unique position vis-à-vis 

economists at many other competition and consumer protection agencies in that the BE Director reports 

directly to the Chairman of the agency and makes recommendations directly to the full Commission. As a 

result, economist input into enforcement and other decisions is not merely subsumed into recommendations 

controlled by attorneys or case handlers, as is the case at many other agencies. More recently, a number of 

competition agencies have been adopting the BE organizational model and giving the office of the chief 

economist a direct reporting line to the agencies’ top leadership. 

122 DeSanti, 7/29 DC Tr. at 152-53. 

39
the needs of the agency’s operational units. DeSanti, however, suggested that the agency 

consider merging all the policy shops together into one.123

 In sum, panelists and other commentators have observed that the FTC can 

improve its performance by building stronger links among the bureaus and other offices, 

such as between competition and consumer protection staff, as well as by including 

economists in all aspects of the agency’s work. Some panelists suggested that a policy 

office could play a useful role in improving these links and disseminating important 

insights throughout the agency. 

3. Placement of Economists within the Agency 

As part of the FTC’s functional organization, discussed above, the FTC’s Ph.D. 

economists are organized together within its Bureau of Economics.124 Except for a sixyear period beginning in 1954, the Commission has had a separate economic unit since 

the agency opened its doors,125 and almost all of the economists have been located in that 

organization. It is only since the 1970s, however, that the unit has been staffed primarily 

with Ph.D.-level economists.126

There are now over 100 competition agencies in the world, many of which have 

Ph.D.-level economists on staff. The mix of Ph.D.s and undergraduate degree 

economists varies substantially across the organizations. The larger and more prestigious 

agencies tend to have a more Ph.D.-intensive mix. In some instances, the economists 

work for attorneys, and in others they are combined in their own subgroup and report to 

economist managers. Economic resources also can be organized in a hybrid form, in 

which several economists are located in a head office, but economists also are sprinkled 

among the attorney staff with attorney review of economic work. Variants of this hybrid 

 

123 Id. at 153. See also Salinger, 7/29 DC Tr. at 136 (questioning the existence of multiple policy shops at 

the FTC). 

124 This does not include a few attorneys in other offices who have a doctorate in economics as well as a 

law degree. In addition, a few attorneys have substantial graduate training in economics short of a Ph.D. 

125 In 1954, following the transition to the Eisenhower administration, the FTC underwent a reorganization 

and the economists were rearranged along with the rest of the agency. Chairman Edward Howrey moved 

the subset of economists who worked on mergers out of the Bureau of Economics and into the Bureau of 

Investigation, which put them under the supervision of attorneys working on cases. This organizational 

structure lasted for six years until Chairman Paul Rand Dixon and incoming BE Director Willard Mueller 

returned to the previous structure. While they were under the supervision of attorney/managers, the 

economists chafed at being supervised and having their recommendations filtered by attorneys. For a 

discussion of this period, see FTC Workshop, FTC History: Bureau of Economics Contributions to Law 

Enforcement, Research, and Economic Knowledge and Policy: Roundtable with Former Directors of the 

Bureau of Economics, at 19-20, 24-26, 73-76 (Sept. 2003) (transcript of roundtable) [hereinafter BE 

History Roundtable], available at

http://www.ftc.gov/be/workshops/directorsconference/docs/directorstableGOOD.pdf#page=1. 

126 Jesse Markham has noted that Ph.D.s at the FTC numbered as few as five in the 1940s and 1950s. See

Jesse W. Markham, The Federal Trade Commission’s Use of Economics, 64 COLUM. L. REV. 405, 406 

(1964). The move toward a Ph.D.-intensive staffing model began when Willard Mueller became BE 

Director in 1961. The transition was largely complete by the latter 1970s.

40
form exist at the Federal Communications Commission, the U.S. Government 

Accountability Office, and the EC’s DG Comp. 

 As at other agencies with staff economists, economists at the FTC provide case 

support; as at some of these agencies, economists at the FTC also provide case evaluation 

and litigation support, and work on competition advocacy and policy-related research. 

To a considerable extent, the Commission has come to rely on BE to serve as the 

principal quality control agent with respect to the assessment of proposed enforcement 

measures. BE very capably analyzes the economic strengths and weaknesses of proposed 

cases, but it is not well disposed by training and experience to assess litigation risk. The 

Commission would be well advised to consider broader use of devil’s advocate panels 

within the Bureau of Competition, a device the agency has used from time to time to test 

the quality of suggested enforcement matters. 

Some agencies separate the case evaluation function to be done by a stand-alone 

set of reviewers (sometimes called a “second pair of eyes”). These “scrutiny panels” 

ordinarily involve peer review internally by a team of economists and attorneys. Variants 

of this approach are employed by DG Comp and the Office of Fair Trading. In others, 

like the FTC, the case support and case evaluation are combined in a “two hats” approach 

in which case evaluation and case support are both done by the same individual.127

Froeb, Pautler, and Röller note that the optimal form of economist organization 

depends in large part on what the decision makers want and what the task is. Team 

organization, which provides the strongest links among the various members, is clearly 

optimal for litigation support, where intense focus and speed are often required and 

policy analysis is a secondary goal at best. In that situation, the goal is simply to win the 

litigation game, which explains why attorney-led teams typically have been used for 

litigation. 

For case analysis, decisions about bringing cases, and policy R&D, however, the 

FTC’s existing model is more likely to provide the ultimate decision makers with highquality economic analysis and relevant information focused on questions of interest to 

those decision makers. For these purposes, subordinating the economists to attorney 

managers is likely to improve the coordination and agreement between the economist and 

her manager, but it is also likely to have deleterious long-run effects of at least four 

forms: (1) the loss of influence or “voice” of economics on policy and case selection, (2) 

loss of an alternative information flow to the decision makers, (3) poorer staff skill 

retention, and (4) inefficient use of economists with specialized skills or knowledge. 

The existence of specialized skills – for example, expertise in vertical theory, 

game theory, dynamic factors, econometrics, and specific industries – implies that 

 

127 The DG Comp approach (and that of the U.K. OFT) is sometimes a bit more nuanced. The Chief 

Economist’s office might assign one of its economists to the case team. In that instance, that individual 

would wear both hats; but the staff economist on the case team would wear only the case support hat. 

41
economist staff should not be assigned to individual shops. Centralization allows the 

agency to make better use of specialized skills across the alternative uses.128

4. Administrative Adjudication 

Under Section 5(b) of the FTC Act, the Commission may challenge unfair or 

deceptive acts or practices and unfair methods of competition through administrative 

adjudication.129 When the Commission determines that there is “reason to believe” that a 

law violation has occurred, the Commission can vote to issue a complaint setting forth its 

charges. If the respondent elects to contest the charges, the complaint is adjudicated 

before an ALJ in a trial-type proceeding conducted under the Commission’s Rules of 

Practice. The matter is prosecuted by FTC “complaint counsel,” which consists of staff 

from BC, BCP, or a regional office. Upon conclusion of the hearing, the ALJ issues an 

initial decision setting forth his findings of fact and conclusions of law and 

recommending either entry of an order to cease and desist or dismissal of the complaint. 

Either complaint counsel or respondent, or both, may appeal the initial decision to the full 

Commission. 

Upon appeal of an initial decision, the Commission receives briefs, holds oral 

argument, and thereafter issues its own final decision and order. The Commission’s final 

decision is appealable by any respondent against which an order is issued. The 

respondent may file a petition for review with any court of appeals within whose 

jurisdiction the respondent resides or carries on business or where the challenged practice 

was employed. If the court of appeals affirms the Commission’s order, the court enters 

its own order of enforcement. The party losing in the court of appeals may seek review 

by the Supreme Court.130

 Panelists shared a variety of opinions about the administrative adjudicatory 

process, and many suggested modifications to modernize and make the system more 

effective. Former General Counsel Stephen Calkins observed that elimination of the 

administrative adjudication feature would undermine the Commission’s special role.131 

Calkins explained: 

[O]ne of the alleged comparative advantages of the 

Commission is that it can be an adjudicative body. And I 

do think that it is – it’s important for this agency to get it 

 

128 One way to try to overcome some of the costs caused by scattering the economists would be to have a 

centrally run economist office responsible for hiring, evaluation, and training, but still retain the assignment 

of individuals to legal shops. (This is a part of the OFT’s approach.) 

129 15 U.S.C. § 45(b). Under Section 13(b) of the Act, 15 U.S.C. § 53(b), the Commission also can seek 

relief in court. Section 13(b) allows the Commission to seek either a preliminary injunction (in aid of 

administrative litigation) or a permanent injunction (in lieu of administrative litigation). 

130 Additional information regarding FTC administrative adjudication is available at 

http://www.ftc.gov/ogc/brfovrvw.shtm. 

131 Calkins, 7/30 DC Tr. at 105-06. 

42
right, to make it work, because it’s one of the reasons we 

have a Federal Trade Commission.132 

 Former BC Director Susan Creighton stated that administrative litigation is 

particularly well suited for the most difficult and challenging cases the Commission 

faces.133 Darren Bowie, former BCP Assistant Director, echoed this sentiment, stating: 

I think, as technology evolves and consumer protection 

continues to evolve, there are new areas that do require . . . 

thoughtful application of the Commission’s expertise. 

Now, that also assumes that there are ALJs with the 

expertise along the lines of some of the earlier discussion. 

But I do think there is a place for Part III in consumer 

protection in these new areas.134 

Some panelists suggested that administrative adjudication is not the proper forum 

for the FTC to pursue cases, as the process of having the FTC both issue the complaint 

and then become the appellate tribunal creates an appearance problem. For example, 

former BC Director William Baer suggested that there is an inherent problem when the 

process appears tilted as there is a reduction of the deference that a court would 

eventually pay to the FTC on appeal.135 Former BC advisor Thomas Krattenmaker said 

he generally favors administrative adjudication but is concerned about the system’s 

general effectiveness not only to assess critical facts but also to shape competition 

policy.136 He pointed out that there sometimes is an appearance that outcomes are 

predetermined because the Commission acts as judge and jury relative to the complaint 

that the Commissioners themselves issued.137 

Another criticism of FTC administrative adjudication involves the time it takes to 

complete the proceedings. Janet McDavid said that the slow pace of the proceedings 

undermines the effectiveness of administrative adjudication.138 Baer suggested that the 

process needs to become faster – by eliminating steps, making the Part III process more 

focused, and reaching final agency decisions in a more timely fashion.139 Thomas 

Campbell echoed this sentiment, suggesting that the process “takes forever” to yield 

 

132 Id.

133 Creighton, 7/29 DC Tr. at 77-79. 

134 Bowie, 7/29 DC Tr. at 106. 

135 Baer, 7/29 DC Tr. at 102-03. Baer emphasized this issue in the context of appointing a Commissioner to 

serve in the capacity of an ALJ. Although Baer recognized that the Administrative Procedure Act and the 

FTC Rules of Procedure permit this practice, he expressed the concern that a Commissioner who has had a 

role in evaluating the case serving as an ALJ adversely affects the perception of impartiality. Id.

136 Krattenmaker, 7/30 DC Tr. at 100. 

137 Id. at 100-01. 

138 McDavid, 7/30 DC Tr. at 103-04. 

139 Baer, 7/29 DC Tr. at 99-100. 

43
results.140 Bowie, however, pointed out that federal court consumer protection litigation 

also can be very slow for nonfraud cases.141 Furthermore, despite the time it takes, Baer 

stated that Part III as a process is helpful and does affect business practices, regardless of 

outcomes.142 Krattenmaker suggested that the agency modernize Part III adjudication by 

adopting a policy of issuing narrow complaints with several determinations of fact 

already in place, setting strict instructions to ALJs to resolve specific disputes on facts, 

and keeping the process on a tight time frame.143 Krattenmaker offered that modifying 

the system by narrowing the scope of the factual questions in cases may make it a more 

useful policy device.144 

The Commission recently has adopted wide-ranging amendments to its rules of 

practice intended, in part, to expedite administrative litigation. Among other things, the 

new rules set a default time line (subject to modification in appropriate cases), 

anticipating that cases will go to trial within eight months of the Commission’s 

complaint, with merger cases in which the Commission sought a preliminary injunction 

going to trial within five months. The rules also set a timetable for the Commission to 

decide cases within the former scenario within 100 days after the ALJ’s initial decision, 

and the latter within 50 days.145

 

Panelists also discussed ALJ expertise in handling the types of administrative 

cases before them. Baer explained that the selection process is not designed to choose 

experts in competition or consumer protection law, but rather to appoint independent fact 

finders that may actually have little expertise in the areas of FTC enforcement.146 

Campbell expressed concern that the lack of relevant expertise on the part of the ALJs 

created a lack of confidence in their findings by the Commission.147 He claimed that, 

unlike a federal or state court judge who is given deference on findings of fact, ALJs are 

not necessarily afforded such deference, as there have been several cases in which the 

Commission has outright rejected the ALJ’s findings of fact.148 This observation 

supports the sentiment expressed by other panelists that the issues presented to ALJs 

should be narrow questions of fact rather than expansive legal and policy questions.149 

Former BC Director Richard Parker echoed concern over ALJ selection and offered a 

 

140 Campbell, Chicago Tr. at 110. 

141 Bowie, 7/29 DC Tr. at 105-06. 

142 Baer, 7/29 DC Tr. at 100 (explaining that despite the adverse result in FTC v. Schering-Plough, pursuing 

the action was important for policy reasons). 

143 Krattenmaker, 7/30 DC Tr. at 101-03. 

144 Id. at 101. 

145 The proposed revised rules and comments on such rules are available at 

http://www.ftc.gov/os/2008/09/P072104nprmpt3.pdf. 

146 Baer, 7/29 DC Tr. at 100. 

147 Campbell, Chicago Tr. at 112-13. 

148 Id. 

149 Krattenmaker, 7/30 DC Tr. at 101. 

44
solution to improving the ALJ ranks by drawing on antitrust and consumer protection 

attorneys to act as ALJs.150 It bears noting, however, that the ALJ selection process is 

dictated by government-wide requirements and not by FTC rules or policy. 

Looking ahead, the agency should determine what role Part III adjudication 

should play in advancing competition and consumer protection law enforcement and 

policy. In particular, the agency should consider when administrative adjudication is 

most appropriate, as well as ways to improve the adjudicatory process. 

 

150 Parker, 7/29 DC Tr. at 103-04. In this vein, in its 2008 transition report, the American Antitrust Institute 

(“AAI”) has called for the next administration to select ALJs with prior experience in economics and 

antitrust, and recommended that the agency include ALJs in training efforts to build their knowledge in 

these and consumer protection areas. See AM. ANTITRUST INST., THE NEXT ANTITRUST AGENDA: THE 

AMERICAN ANTITRUST INSTITUTE’S TRANSITION REPORT ON COMPETITION POLICY TO THE 44TH PRESIDENT 

OF THE UNITED STATES 185 (2008) [hereinafter AAI TRANSITION REPORT], available at

http://www.antitrustinstitute.org/archives/transitionreport.ashx.

45
III. Agency Resources 

The FTC’s ability to achieve its mission depends in significant part on its 

allocation and management of personnel, capital, and information resources. As one 

commentator recently observed, “The failure to maintain adequate financial and human 

resources impedes the [FTC’s and DOJ’s] activities on a number of fronts.”151 This 

chapter examines how these three factors can broadly affect agency performance. 

A. Personnel 

How the FTC approaches recruiting, training, and retention of talented and 

competent personnel bears significantly on the agency’s ultimate success. As roundtable 

panelists and commentators have discussed, a recurring topic in agency assessments is 

the caliber of the agency’s professional staff.152 One panelist emphasized the importance 

of having a competent staff153 and observed that the agency needs to be “on top of [its] 

game” in hiring.154 FTC leadership has made recruiting highly competent staff a high 

priority for the agency.155 In recent years, the agency also has established new programs 

to provide individual career development counseling to enhance the skills of its attorneys, 

economists, and administrative professionals. 

A related issue is determining by what criteria one should assess candidates for 

FTC employment. There does not appear to be any single objective criterion to 

determine whether or not staff is highly competent and skilled, although the factors likely 

include some combination of educational background, relevant industrial or practical 

experience, willingness to receive training, and a strong interest in the subject matter of 

the agency’s work. Determining the ideal balance of these criteria has been the focus of 

recruiting efforts at various times in the FTC’s history, and it has been altered at times to 

 

151 ABA TRANSITION REPORT, supra note 11, at 12. 

152 See, e.g., AMERICAN BAR ASS’N, REPORT OF THE ABA COMMISSION TO STUDY THE FEDERAL TRADE 

COMMISSION 32-34 (BNA 1969) [hereinafter 1969 ABA REPORT]. In evaluating the agency 40 years ago, 

the ABA expressed concerns about hiring practices at the FTC when a director in the Bureau of 

Competition explained that he sought to hire attorneys “[w]ho had been out in the world for ten years or so 

and had come to appreciate that they were not going to make much of a mark – because they tended to be 

loyal and remain with the FTC.” The ABA recommended that the hiring process be dramatically 

overhauled. Id. 

153 Breul, 7/30 DC Tr. at 39 (explaining: “You’ve really got to have the people and the capabilities, with the 

right skills and the right experience in the right place here to get on with those outcomes. And that’s a huge 

challenge that is affected by, in many cases, limited FTE[s] or limited dollars.”). 

154 Id. 

155 See, e.g., Conversation with Muris and Pitofsky, supra note 27, at 850 (Pitofsky discussing responses of 

the agency to the concerns raised by the 1969 ABA Report); Muris, 7/29 DC Tr. at 30-31. This theme was 

echoed in the 2008 AAI Transition Report, which raised a concern relative to lawyers and other 

professionals and suggested that, as many senior career people approach retirement, given the income 

disparity between government and private sector employment, the agency needs to be cognizant of how it 

will recruit talented professionals in the future. See AAI TRANSITION REPORT, supra note 150, at 188. 

46
address specific needs relative to the agency’s agenda.156 Given the evolution of 

competition and consumer protection policy, and changes in the tools of economic 

analysis, any self-assessment should consider how the agency can recruit and retain welltrained personnel in relevant areas of expertise, as well as how the agency trains and 

educates its existing staff to remain current in such areas. 

One challenge to the agency’s ability to recruit and keep professional staff is that 

the FTC, as a government agency, faces significant competition from private sector 

employers who typically can offer higher wages. The agency should continue to engage 

Congress in a discussion about the possibility for augmenting the existing federal pay 

scale to enable the FTC to make salary-based departures to the private sector less 

frequent. There is serious question about whether the Commission’s capacity, and that of 

other public agencies in the United States, can be sustained at acceptable levels if 

compensation levels are not increased substantially. 

To offset this pay disparity and recruit talented professionals, many panelists 

suggested that the FTC employ a combination of first-rate training and ample 

opportunities for staff to apply their skills and knowledge in interesting and innovative 

legal and policy areas. Former BCP Deputy Director Teresa Schwartz discussed how it is 

important to encourage staff to learn new things and to afford them opportunities to apply 

their skills.157 Staff exchanges, as discussed in Chapter IV.D, are an extremely effective 

tool to exchange best practices, solidify bilateral relationships, and strengthen 

enforcement cooperation with foreign counterparts, as well as add to an employee’s 

knowledge base and skills. Many foreign counterpart agencies use staff exchanges 

extensively as a way to promote staff development.158

Likewise, former BC Director Molly Boast suggested that creating a strong 

training and development program will not only help the FTC recruit talent, but it will 

also serve to improve staff morale and retain talented attorneys and economists at the 

agency.159 The Commission has an extensive training program, including an agencywide annual training program for new attorneys and economists. BCP also has 

implemented its own annual two-day training for new BCP attorneys to help them 

 

156 See Historical Society of the District of Columbia Circuit, Oral History Project: Robert Pitofsky, 

Esquire 125 (Mar. 10, 2004) [hereinafter Pitofsky Interviews], available at

http://www.dcchs.org/RobertPitofsky/robertpitofsky_complete.pdf (“I wanted to educate a generation of 

competent lawyers, and I thought bringing in outsiders was the wrong way to do that. So that’s senior staff. 

Junior staff – we were extremely active in reaching out to the law schools and to young people at law firms 

for exceptional people, and since there was the greatest merger wave in the history of the country going on, 

and much interest in what consumer protection could do about unwelcome phone calls, spam, deception 

and unfairness in the sale of computers, and so forth, it became quite an attractive place for young 

people.”); see also Baer, 7/29 DC Tr. at 82.

157 T. Schwartz, Chicago Tr. at 83. 

158 At the U.K. Office of Fair Trading, for example, in Fall 2008 there were 24 individuals visiting the 

agency on staff exchanges, and 17 OFT employees at other agencies. Consultation with OFT, Sept. 11, 

2008. 

159 Boast, NY Tr. at 36-37. 

47
understand everything they need to know to bring successful BCP cases. Annually, BCP 

also conducts a two-day litigation seminar at which staff discuss topics such as recent 

cases, litigation developments, electronic discovery, ethics, and other significant 

litigation topics. BCP management also encourages staff and management to take 

additional courses as needed. Additionally, BCP established a specialized “training 

academy” for staff that work on financial practices matters to teach topics such as the role 

of federal and state regulators of financial institutions, the mortgage business, 

fundamentals of credit reporting and credit scoring, payment cards and payment systems, 

and the legal framework of credit discrimination. Similarly, the Bureau of Competition 

sponsors ongoing annual classes for training staff attorneys, which are led by BC 

attorneys, economists and accountants from the Bureau of Economics, and private 

attorneys from around the country. The coursework includes classes on substantive 

topics such as the merger guidelines, statistics, and accounting, as well as intensive twoto-four-day practice sessions on depositions, evidence, and trial advocacy. BE has a 

seminar series that brings in academics doing work on topics of interest to the 

Commission, as well as occasional intensive courses for its staff, such as a recently held 

econometric course. Also, BE staff are encouraged to pursue research on topics of 

interest to the Commission and to present that work in professional settings, both of 

which serve to enhance staff skills. 

 Former BCP Assistant Director Paul Luehr projected that, over time, the 

importance of technical expertise for FTC staff will become more pronounced.160 In 

particular, Luehr foresees an increased demand for attorneys with technical expertise: 

I think it’s going to be more technical in terms of the level 

of skills that’s going to be required of the investigators and 

attorneys. That’s where the marketplace is going and that’s 

going to be a requirement despite all those kids who went 

to law school to avoid math. I think they’re all going to be 

numerically and technically oriented.161 

Luehr forecast that the FTC will grow both in size and stature as a neutral broker with 

respect to consumer data and market analysis, likely resulting in better overall regulation 

and enforcement.162 Another panelist encouraged the agency to direct resources to 

ongoing training to inform staff about complex issues of consumer protection as well as 

technological advances, to stay current on new scams, and to improve investigative 

skills.163

 In the same vein of ensuring staff keep their skills current, former BC Director 

William Baer encouraged better use of the performance evaluation process, suggesting 

 

160 Luehr, Chicago Tr. at 101. 

161 Id. 

162 Id.

163 Brauch, Chicago Tr. at 84-85. 

48
that the agency consider whether it is a meaningful way to promote the knowledge and 

skill development of staff.164 He favored using the process not solely to reward excellent 

performance but also as an opportunity to promote development in areas in which staff 

performance is “sub-excellent.”165

 The London roundtable involved much discussion about developing talent within 

the agency. Former General Counsel Debra Valentine advocated that, rather than relying 

too heavily on outside academics to pursue research relevant to the FTC’s mission, “it is 

the agency’s obligation to develop a lot of that talent in-house and not farm it out.”166 

Having economic strength in-house is critical, as former OFT Chief Executive Sir John 

Vickers suggested, for no other reason than to have the ability to appraise critically the 

economic theories brought before the agency by outside parties.167

 External consultations yielded several recommendations on how to improve the 

recruiting, training, and retention of skilled professionals at the FTC. How the agency 

meets the ongoing challenge of recruiting and retaining talented professionals will be a 

key factor in the agency’s success. An important step toward meeting this challenge is to 

confront the tension that arises when managers are told to achieve strong short-term 

operational results – for example, winning the case of the moment – and to invest in the 

long-term development of personnel they supervise. The top leadership of the 

Commission must ensure that incentives for managers related to salaries, promotions, and 

various agency awards reflect the importance to be paid to the career development of the 

professional staff. 

B. Capital Resources 

 In several respects, an agency’s budget dictates the deployment of its resources 

and thus dictates its ability to achieve its mission. Assessing an agency’s central 

budgeting concerns and operating principles is an essential component of understanding 

agency policy.168 As one panelist phrased it, “The budget often does . . . associate 

outputs to dollars. Frankly, that’s okay because there is a relationship there and that 

works.”169

Bernard Martin has examined how federal agency leadership pursues an agenda 

that comports with the expectations of major stakeholders (for example, the executive 

branch) and communicates the agency’s agenda to staff and other stakeholders through 

 

164 Baer, 7/29 DC Tr. at 92. 

165 Id. 

166 Valentine, London Tr. at 76. 

167 Vickers, London Tr. at 78. 

168 See Bernard H. Martin, Office of Management and Budget, in GETTING IT DONE: A GUIDE FOR 

GOVERNMENT EXECUTIVES 70 (Mark A. Abramson, Jonathan D. Breul, John M. Kamensky & G. Martin 

Wagner eds., 2008). 

169 Breul, 7/30 DC Tr. at 23. 

49
the budget process.170 Federal funding resources are limited, fiscal pressures are 

significant, and the sources for agency funding have become broader and more complex. 

Martin makes the point that, despite these pressures and complexities, to be successful, 

any agency leader must recognize that the budget – either one set by Congress or one 

managed within the agency – and policy are inseparable.171 For these reasons, a wellplanned and effective budget policy, including allocations within that budget, is essential 

for the success of any agency.172 

The budget process is one tool with which to highlight a particular type of agency 

activity, such as policy research and development. Former Commissioner Thomas Leary 

discussed how various programs have greater priority if given greater prominence in the 

agency’s budget. In advocating for a greater emphasis on agency R&D, he stated: “I’ve 

always thought if we could rejigger the budget process to make [research and 

development] part of our core mission, I’d do it, just to emphasize how important it 

is.”173 Another panelist echoed this sentiment when he discussed making a priority of 

internal program reviews and evaluations.174 He explained that the success of such 

internal evaluations and their relevance to understanding what the agency has 

accomplished and their impact on future conduct will be directly linked to the budgeta

emphasis they receive.

ry 

ot 

aders. 

 

175 Former Chairman Timothy Muris agreed with such sentiments, 

but noted that the budget process is a tool within the Commission that historically has n

been used “effectively” by agency le 176

 If, as Bernard Martin has suggested, agency budgets and policies are 

inseparable,177 the FTC’s budget must be able to strike a balance that both reflects agency 

priorities, as expressed to staff and external stakeholders, and is sufficiently flexible to 

respond to circumstances that require a shifting of budgetary priorities. For example, 

allocation of BCP resources among the many tools with which it pursues its mission –

including enforcement actions, rulemaking, consumer and business education, policy 

R&D efforts, and promotion of industry self-regulation – has shifted at different times to 

meet different agency needs. Muris discussed how under his leadership privacy-related 

issues required additional resources, and flexibility to deploy budgetary assets to address 

these growing concerns enabled the agency to be on the forefront of many privacy 

issues.178 Baer similarly explained that when he joined the agency in 1995, the FTC had 

170 Martin, supra note 168, at 70. 

171 Id. at 71-72. 

172 Id.

173 Leary, 7/29 DC Tr. at 27. 

174 Korsun, NY Tr. at 139. 

175 Id. 

176 Muris, 7/29 DC Tr. at 50. 

177 See Martin, supra note 168, at 71-72. 

178 Muris, 7/29 DC Tr. at 41-42, 54-55. 

50
suffered a string of defeats in court; he thus sought to shift budgetary funds toward hiring 

specialized lawyers and training more attorneys to improve litigation skills.179 

The Commission also can adjust its program priorities rapidly, as needed, to 

address new problems in the marketplace triggered or exacerbated by external events. 

For example, as the crisis in the housing market deepened, various businesses emerged 

with false promises that they could stop foreclosure or obtain a loan modification in 

exchange for a large upfront fee; in 2008, the Commission moved quickly to take legal 

action against several such operations, and developed needed educational materials to 

warn consumers how to avoid being victimized by rescue scams and how to obtain 

assistance from legitimate and reliable sources. Former Director of Policy Planning 

Susan DeSanti also discussed how budgetary resources could be focused to foster better 

sharing of information within the agency to avoid redundancy and ensure that research 

and enforcement resources are utilized most effectively.180

 Drawing from the comments of roundtable panelists and commentators more 

generally, an analysis of the allocation of capital resources must extend beyond the 

simple question of “how much is our budget?” It needs to assess how the agency 

identifies areas for policy and enforcement emphasis, how leadership sets the policy 

through its budget allocation, and how the agency can adjust to meet challenges presented 

when political, social, and economic changes affecting the agency and its stakeholders 

occur. 

C. Information 

The Commission needs information to detect problems, investigate them, and 

then, through litigation or otherwise, address them. Decisions concerning how to allocate 

personnel and capital resources are largely dependent on the information the agency 

obtains regarding marketplace conduct, mergers and other transactions, and legal, 

economic, and technological developments. How well the agency obtains information, 

the quality of the information it gets, and how it analyzes this information also must be 

considered in connection with the FTC’s effective use of personnel and capital resources. 

By the end of the twentieth century, the volume of information coming to the FTC 

regarding potential enforcement targets or areas of concern for consumer protection had 

increased dramatically.181 With the proliferation of telemarketing fraud in the 1980s and 

Internet fraud in the 1990s, the task of receiving and responding to complaints had 

become too large to be handled by attorneys and investigators, whose time was largely 

committed to conducting investigations and bringing enforcement actions. At the same 

 

179 Baer, 7/29 DC Tr. at 82. 

180 DeSanti, 7/29 DC Tr. at 130. 

181 Information-related concerns often are framed in terms of whether the agency is getting enough 

information. One roundtable panelist, however, described the situation today as one of information 

overload, in which agencies have too much information and need to sort through it to determine which is 

useful and which is not. Breul, 7/30 DC Tr. at 40. 

51
time, the advent of electronic databases enabled information tracking in a way never 

before possible, and the Commission became more active in seeking out information 

about new trends or potential problems before they emerged in the form of consumer 

complaints. 

In response to the changes in the form, substance, and volume of marketplace 

information, the FTC opened its Consumer Response Center to fulfill increasingly 

important information gathering functions. Today, the agency receives and responds to 

thousands of consumer and business complaints or inquiries each week. Complaints are 

made available to FTC staff and other law enforcement agencies in the U.S. and 

worldwide through the FTC’s Consumer Sentinel Network, a secure online database that 

includes not only complaints received by the FTC, but also by other selected government 

agencies and nongovernmental entities. The Consumer Sentinel Network is accessible 

only to law enforcement agencies, and about 1,700 such agencies worldwide are 

members. 

 Additionally, the advent of the Internet not only expanded marketing venues, but 

also has greatly facilitated advertising monitoring, particularly with the use of search 

tools that can focus on particular products or claims. Internet “surfs” are now a regular 

activity for BCP investigators, particularly with regard to claims for dietary supplements 

and other health-related products.182 BCP’s investigative leads also come from 

monitoring other media, competitor complaints, referrals by self-regulatory bodies, and 

other sources. 

 The Bureau of Competition gathers information about transactions and ongoing 

conduct in the marketplace primarily through specific statutory reporting requirements. 

Its main source of information comes from the Hart-Scott-Rodino Act183 requirement that 

merging companies file certain data in advance of consummation. In general, a filing 

party is required to identify the parties involved and the structure of the transaction as 

well as provide certain documents, such as balance sheets and other financial data, and 

copies of documents that have been filed with the Securities and Exchange Commission. 

In addition, the parties are required to submit certain planning and evaluation documents 

that pertain to the proposed transaction. To evaluate such proposed transactions, BC 

often gathers information not only from the merging parties but also from competitors 

and other industry players to discern the competitive status of the industry affected by the 

merger. Also, on a much smaller scale, the FTC receives information about certain 

settlements between brand-name drug manufacturers and generic drug applicants 

pursuant to Title XI of the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003.184 

 

182 See also Conversation with Muris and Pitofsky, supra note 27, at 789-90 (“Another creative use of 

technology devised by the Bureau staff was the Internet “surf,” a way to search the online marketplace for 

deceptive practices. Over my term as Chairman, FTC staff, often in collaboration with many other 

enforcement agencies, conducted dozens of surf days, uncovering and following up on thousands of Web 

sites found to be engaged in deceptive practices.”). 

183 15 U.S.C. § 18a. 

184 Pub. L. No. 108-173, 117 Stat. 2066. 

52
Apart from statutorily required filings, BC also gathers information to detect and 

investigate possible law violations through complaints from, and inquiries directed to, 

competitors, suppliers, and consumers.185 It is not uncommon for lawyers in the antitrust 

bar to contact the agency on behalf of clients – sometimes in relation to nonreportable 

mergers or other conduct of concern to their clients – and identify conduct that may 

violate the antitrust laws. (One panelist cautioned against discounting or categorically 

ignoring complaining competitors as a source of case generation, explaining that, 

although not all competitor complaints are legitimate, they are a source of potentially 

useful information.186) Similarly, members of Congress send constituent complaints to 

BC regarding possible anticompetitive conduct observed in their jurisdictions. BC also 

uses an email notification system (Antitrust@ftc.gov) and a complaint phone line to 

gather complaints that may warrant BC inquiry. FTC staff also have created a program to 

monitor competitive conditions in the gasoline industry, and they receive data regularly 

regarding prices and other conditions in the industry.187 In addition, staff can glean 

relevant information from public sources.188

Further, in both the competition and consumer protection areas, the agency gathers 

relevant industry and marketplace information by convening conferences, workshops, and 

hearings to address current and emerging issues in these areas. Such events have become an 

important means through which the Commission and its staff identify problems and develop 

appropriate responses. In particular, they have allowed the FTC to solicit the views of 

experts and interested parties outside the agency – including those from industry, consumer 

groups, academia, and other federal, state, or local agencies – to help the Commission better 

understand its role and formulate the most appropriate responses in particular problem 

areas.189

 

The FTC also obtains information from other competition and consumer 

protection agencies, both foreign and domestic. Mutual sharing is facilitated by the 

 

185 At one time, the FTC also gathered industry data through other programs, including most notably annual 

line of business program reporting that collected data on the economic performance of large U.S. firms. 

See, e.g., F. M. Scherer, Sunlight and Sunset at the Federal Trade Commission, 42 ADMIN. L. REV. 461, 

476-83 (1990). This program was stopped in the mid-1980s because agency leadership determined that the 

costs of the program outweighed the benefits. Id. at 480-85. 

186 First, NY Tr. at 61. 

187 BE staff receives daily data from the Oil Price Information Service, a private data collection company. 

Staff receives information weekly from the Department of Energy’s public “Gas Price Hotline,” and also 

reviews other relevant information that might be reported to the FTC directly by the public or by other 

federal or state government entities. An econometric model is used to determine whether current retail and 

wholesale prices each week are anomalous in comparison with historical data. Additional information 

regarding this program is available at http://www.ftc.gov/ftc/oilgas/gas_price.htm. 

188 For example, former BC Director Richard Parker identified trade press and trade association bylaws as 

sources of potentially relevant information. Parker, 7/29 DC Tr. at 74-75. 

189 The FTC’s policy research and development efforts, including the use of such events, are discussed in 

more detail in Chapter V.C. 

53
Commission’s broad authority to share information (including most materials subject to 

limits on public disclosure) with domestic law enforcement agencies.190 

As to sharing with foreign agencies on competition matters, the FTC shares and 

obtains information from foreign counterparts pursuant to formal and informal 

arrangements that are consistent with the FTC’s statutory obligations of confidentiality. 

Formal arrangements include bilateral cooperation agreements,191 informal arrangements 

under an OECD Recommendation,192 and agreements pursuant to the terms of the 

International Antitrust Enforcement Assistance Act of 1994 (“IAEAA”).193 Absent an 

IAEAA agreement (and the Commission has entered into an IAEAA agreement only with 

Australia) or the consent of the submitter (which is usually forthcoming),194 the 

Commission cannot share most of its nonpublic submissions with foreign enforcers. 

Nevertheless, in addition to publicly available information that the FTC may share with 

foreign agencies, it also shares relevant information that it is empowered but not 

mandated to keep confidential. Such information can include the fact that an 

investigation is taking place, its subject matter, and agency analysis. 

In addition to international information sharing through Consumer Sentinel, the FTC 

shares and obtains information from its foreign counterparts in consumer protection and 

privacy matters both informally and pursuant to formal bilateral cooperation agreements, 

bilateral and multilateral memoranda of understanding and other agreements, and through 

networks such as the International Consumer Protection and Enforcement Network and the 

London Action Plan. In 2006, the Commission’s ability to cooperate with its foreign 

counterparts was enhanced by the U.S. SAFE WEB Act,195 which amended the FTC Act. 

This law includes provisions that enable foreign law enforcement authorities and private 

entities more easily to provide information to the FTC in cross-border matters, including 

matters involving assets located in foreign jurisdictions that are subject to recovery by the 

 

190 See, e.g., 15 U.S.C. § 46(f). Absent the consent of the submitter, however, the Commission cannot share 

submissions under the Hart-Scott-Rodino Act with domestic agencies. 

191 The United States has entered into bilateral agreements on antitrust cooperation that provide for 

information sharing with Germany (1976), Australia (1982 and 1999), the European Communities (1991 

and 1998), Canada (1995 and 2004), Israel (1999), Japan (1999), Brazil (1999), and Mexico (2000). See

FTC Office of International Affairs, International Antitrust and Consumer Protection Cooperation 

Agreements, http://www.ftc.gov/oia/agreements.shtm. 

192 OECD, RECOMMENDATION OF THE COUNCIL CONCERNING CO-OPERATION BETWEEN MEMBER 

COUNTRIES ON ANTICOMPETITIVE PRACTICES AFFECTING INTERNATIONAL TRADE (1995), available at

http://webdomino1.oecd.org/horizontal/oecdacts.nsf/linkto/C(95)130. 

193 15 U.S.C. §§ 6201-6212. The IAEAA allows the FTC (and DOJ) to enter into bilateral antitrust mutual 

assistance agreements with foreign governments that authorize the FTC (and DOJ) to share confidential 

information obtained in investigations and to use its investigatory powers to gather evidence on behalf of 

the other party to the agreement. See ABA SECTION OF ANTITRUST LAW, COMPETITION LAWS OUTSIDE THE 

UNITED STATES 114 (2005). 

194 See International Competition Network, Waivers of Confidentiality in Merger Investigations, § 2.A., at

3-4, available at http://www.internationalcompetitionnetwork.org/media/archive0611/NPWaiversFinal.pdf. 

195 U.S. SAFE WEB Act of 2006, Pub. L. No. 109-455, 120 Stat. 3372 (codified as amended in scattered 

sections of 15 U.S.C.). 

54
Commission. The U.S. SAFE WEB Act also enables the FTC to obtain information for 

foreign consumer protection agencies and to share with such agencies most information 

otherwise subject to prohibitions on disclosure.196

 Of course, like other enforcement agencies, the FTC also has enforcement-related 

authority to issue compulsory process, such as subpoenas and civil investigative 

demands. Apart from a particular investigation, however, the FTC also has unique 

powers to obtain information – in both competition and consumer protection matters – 

pursuant to Section 6 of the FTC Act.197 Specifically, Section 6(b) empowers the 

Commission to require the filing of “annual or special . . . reports or answers in writing to 

specific questions” for the purpose of obtaining information about “the organization, 

business, conduct, practices, management, and relation to other corporations, 

partnerships, and individuals” of the entities to whom the inquiry is addressed.198 The 

Commission’s 6(b) authority enables it to conduct wide-ranging economic studies that do 

not have a specific law enforcement purpose. Section 6 also authorizes the Commission, 

subject to applicable confidentiality constraints, to “make public from time to time” 

portions of the information that it obtains, where disclosure would serve the public 

interest.199 Such disclosure typically takes the form of a report issued by FTC staff or the 

Commission. 

The FTC used its 6(b) authority in several recent competition research efforts. 

For example, former Chairman Robert Pitofsky signed the 6(b) orders in April 2001 that 

led to a 2002 report on generic drug entry.200 Other studies in which 6(b) orders were 

used include the 2005 study of pharmacy benefit managers and the impact, if any, of 

mail-order pharmacy ownership,201 and a 2006 report on gasoline pricing manipulation 

 

196 See 15 U.S.C. § 57b-2(f)(2) (confidentiality of material obtained from a foreign source); id. § 57b-2(b) 

(exemption from liability for voluntary provision of information); id. §§ 46(f), 57b-2(b)(6) (authorizing 

certain sharing with foreign authorities); id. § 46(j)(4) (international agreements).

197 15 U.S.C. § 46. 

198 Id. § 46(b). 

199 Id. § 46(f). Section 6(b) also allows the Commission to obtain answers to specific questions as part of 

an antitrust law enforcement investigation, where such information would not be available through 

subpoena because there is no document that contains the desired answers. Id. § 46(b). Confidentiality 

constraints often can be satisfied by publishing data in aggregated or anonymized form. 

200 FTC, GENERIC DRUG ENTRY PRIOR TO PATENT EXPIRATION: AN FTC STUDY (2002), available at

http://www.ftc.gov/os/2002/07/genericdrugstudy.pdf. See Conversation with Muris and Pitofsky, supra

note 27, at 777 (“In 2000 Bob reinvigorated the use of Section 6(b) authority and began the FTC’s 

influential study of entry by generic drugs. The study helped generate cases and resulted in a report . . . 

whose recommendations received a highly public endorsement from the President, induced regulatory 

reforms at the Food and Drug Administration (FDA), and inspired legislative amendments to the HatchWaxman Act.”). 

201 FTC, PHARMACY BENEFIT MANAGERS: OWNERSHIP OF MAIL-ORDER PHARMACIES (2005), available at

http://www.ftc.gov/reports/pharmbenefit05/050906pharmbenefitrpt.pdf. 

55
and post-Hurricane Katrina gasoline price increases.202 In addition, the Bureau of 

Consumer Protection recently used such 6(b) special orders to obtain data from 44 food 

producers to measure the extent of food marketing to children and adolescents,203 and 

from 12 alcohol suppliers to examine the placement of alcohol ads in various media.204

Whether the FTC uses its 6(b) authority in a particular context depends on 

whether there are important policy topics that require investigation that could not be done 

with publicly available or voluntarily submitted data. Certainly, responding to 

compulsory process requests (or even voluntary requests) may be a costly process for the 

respondent firms, and using the process can be time-consuming for the agency. It is, 

therefore, not undertaken lightly. Although recent use of the technique has been valuable 

to the agency in gathering relevant information, the benefits of any particular study are 

hard to estimate. As a result, any cost-benefit analysis involving the use of the agency’s 

6(b) powers necessarily involves a careful consideration of the burdens imposed on 

recipients of 6(b) orders, as well as the appropriate amount of agency personnel and 

capital resources to devote to such efforts. 

Roundtable panelists provided several observations and recommendations regarding 

the FTC’s information collection efforts. Beyond the formal methods discussed above, 

panelists identified other means to obtain relevant information and data on emerging issues in 

support of potential enforcement actions. Former OPP Director Susan DeSanti described 

how, following a staff meeting at which an information gap in an area under investigation 

was identified, one staff member simply reached out to another federal agency (outside the 

FTC’s traditional jurisdiction) and forged an agreement to gather the necessary information, 

thus allowing the FTC to pursue a particular item on its enforcement agenda.205 Former BC 

Assistant Director Joseph Kattan suggested improving information analysis by linking more 

closely the enforcement mission with the research mission, and tapping economics 

departments outside the agency to help produce this work.206 Rebecca Fisher from the Texas 

Attorney General’s office discussed how information is shared between the state attorneys 

general and liaisons at the FTC, which has helped both entities learn about conduct and share 

research and insights relative to issues important to both groups’ constituents.207

 

202 FTC, INVESTIGATION OF GASOLINE PRICE MANIPULATION AND POST-KATRINA GASOLINE PRICE 

INCREASES (2006) [hereinafter FTC POST-KATRINA REPORT], available at

http://www.ftc.gov/reports/060518PublicGasolinePricesInvestigationReportFinal.pdf. 

203 FTC, MARKETING FOOD TO CHILDREN AND ADOLESCENTS: A REVIEW OF INDUSTRY EXPENDITURES,

ACTIVITIES, AND SELF-REGULATION: A REPORT TO CONGRESS (2008) [hereinafter 2008 FOOD MARKETING 

REPORT], available at http://www.ftc.gov/os/2008/07/P064504foodmktingreport.pdf. 

204 FTC, SELF-REGULATION IN THE ALCOHOL INDUSTRY: REPORT OF THE FEDERAL TRADE COMMISSION

(2008) [hereinafter 2008 ALCOHOL SELF-REGULATION REPORT], available at

http://www.ftc.gov/os/2008/06/080626alcoholreport.pdf. 

205 DeSanti, 7/29 DC Tr. at 132. 

206 Kattan, 7/29 DC Tr. at 140. 

207 Fisher, 7/29 DC Tr. at 194. 

56
Information is one of the essential resources of the agency, and, as discussed 

above, the Commission has several methods to gather and analyze information needed to 

establish and pursue its priorities. Given the ongoing shifts in technology and data 

creation, however, the agency must continually evaluate its methods of obtaining the 

information necessary to maintain its effectiveness. 

57
IV. The Agency’s Relationships 

The FTC has significant relationships with various types of external entities, 

including stakeholders and enforcement partners. The Commission is subject to 

oversight by Congress, which can legislate particular tasks, obligations, or limits on its 

activities. In part because of concurrent jurisdiction or related interests, the FTC 

interacts, in various ways, with federal, state, and foreign authorities. In addition, the 

FTC’s broad jurisdiction over consumer protection and competition matters affects a 

wide array of industries and actors, making quite diverse the interests of consumer and 

business groups – and individual consumers and businesses – affected by the agency. 

Finally, relations with academia can substantially assist the Commission in fulfilling its 

mission. 

Former BCP Director Jodie Bernstein explained that maintaining relationships 

with state agencies, congressional committees, consumer groups, industry groups, and 

others is essential to ensuring that stakeholders in the FTC have access to the agency.208 

Panelist Jonathan Breul also observed that networking and relationship building is an area 

of growing importance, and the degree to which an agency incorporates good networking 

into its practices may signal its ultimate success.209 Breul also suggested that these 

relationships can help the agency anticipate surprises and that the FTC should have the 

ability to identify the stakeholders on any given issue.210 

 Three major policy considerations dictate extensive and augmented efforts by the 

FTC to build better links to other agencies. The first is that problems in economic 

performance that the FTC observes sometimes may be rooted in the policy choices of 

other government bodies. The first-best solution to an observed problem may be an 

adjustment in another policy regime. Closer relations with the relevant agencies can 

assist the FTC in encouraging other government bodies to make the desired policy 

change. 

 A second consideration involves the fact of shared or concurrent authority for 

specific forms of intervention. For the sake of clarity in public policy and predictability 

for business managers, it is helpful for agencies with shared responsibilities to converge 

on superior analytical techniques and to adopt procedures that minimize compliance 

costs. 

 The third consideration is that collaboration among agencies may achieve results 

that initiative by a single body cannot attain. For example, cooperation among 

 

208 Bernstein, 7/29 DC Tr. at 56-57. 

209 Breul, 7/30 DC Tr. at 41-42. See also ANNE MARIE SLAUGHTER, A NEW WORLD ORDER 173-76 (2004)

(discussing networks and competition policy); Fox, NY Tr. at 107 (same). 

210 Breul, 7/30 DC Tr. at 41-42; see also Bernstein, 7/29 DC Tr. at 56-57 (“I think it is probably implicit 

that it is absolutely essential for the Commission to have, I think, ongoing consultations with state agencies, 

with Congressional committees, staff and so forth, and with consumer groups and industry groups as 

well.”). 

58
government bodies, particularly in matters of international commerce, may be essential to 

address phenomena that cross the boundaries of authority imposed on any single agency. 

Information sharing and common planning also may enable government bodies to pool 

resources and undertake more ambitious efforts to detect and prosecute improper 

conduct, or to diagnose the causes of apparent shortfalls in economic performance. 

Effective cooperation can be a major source of improved productivity among regulatory 

authorities and may be a necessary means for such bodies to meet the demands they face 

today amid intense pressure to achieve more with the same amount of resources. 

This chapter examines how the agency can work with all of these actors, as well 

as what steps the FTC may undertake to improve and enhance relationships that can build 

and maintain support for the FTC’s mission, leverage the agency’s resources by enlisting 

others to advance the Commission’s mission, and draw on others to help the Commission 

detect competition and consumer protection problems and conduct its own investigations. 

A. Relationship with Congress 

As an independent agency created by Congress, the FTC has an important 

relationship with Congress as an institution and with individual members of Congress. 

Primarily through its Office of Congressional Relations, the FTC works closely with 

congressional committees and subcommittees, individual members, and their staffs, 

responding to inquiries regarding competition and consumer protection matters, testifying 

before congressional panels on FTC policies and programs, preparing reports for 

Congress, and providing congressional staff with the FTC’s free consumer publications 

for distribution to their constituents. 

A number of panelists stressed the importance of the FTC managing carefully its 

relationship with Congress. One way to envision the FTC’s work is that its activities 

involve either accumulating political capital or spending political capital. In choosing 

new programs, the agency must be attentive to the balance of its political capital account. 

An agency that chronically runs major deficits is likely headed for trouble. 

Panelist Jerry Ellig explained that the success of the FTC lies in maintaining 

strong congressional relationships, which can be forged through the FTC explaining to 

members of Congress that the success of the FTC’s mission is good politics for the 

members.211 Anna Davis, the former Director of the FTC’s Office of Congressional 

Relations, agreed with Ellig regarding the need to inform members of Congress that FTC 

success is their success. Davis noted that one of the challenges the FTC faces is 

educating congressional stakeholders on the value to consumers of the agency’s 

competition mission. Fundamental consumer protection concepts – such as stopping 

deception and fraud – are straightforward and their value to constituents is more 

obvious.212 As Davis noted, however, the ways in which consumers benefit from 

competition in the marketplace is not always readily apparent: 

 

211 Ellig, 7/30 DC Tr. at 37-38 (“I think . . . being able to focus on really important outcomes and 

demonstrate them does end up being good politically.”). 

212 Davis, 7/29 DC Tr. at 175-76. 

59
One of the favorite calls I ever took when I was in the 

Congressional Relations Office was a [congressional] staff 

person called up and said, I heard from a constituent and he 

is very upset about gas prices. And I said, yes, ma’am, I 

know there is a lot of that going around. And she said, 

well, he is complaining because he has to drive around all 

over the place, all of the gas stations in his city have 

different prices and he has to drive around to find the 

lowest. Can’t you make them all the same? So, it was sort 

of hard to know how to answer that and sound respectful. 

But that is a piece of it . . . .213

 

Davis also explained that nurturing congressional relationships also requires 

managing staff turnover. Her office took active steps to establish and maintain regular 

communication with congressional offices to mitigate the possible adverse effects of 

disruptions arising from staff and congressional turnover.214 As an example of the need 

to maintain ongoing relationships with Congress, Davis pointed to the efforts her office 

made on the U.S. SAFE WEB Act, which involved many years of work with several 

congressional staffs to get the bill passed.215

 The maintenance of good relationships with key legislators and committees can 

be complicated by the dynamic nature of the political process. Changes in aggregate 

congressional preferences over time may mean that the legislators who currently review 

and critique the Commission’s projects are not the legislators who encouraged the FTC to 

pursue the projects in the first place.216 Past experience suggests the need for the 

Commission to carefully monitor adjustments in legislative preferences and to test the 

agency’s assumptions about the degree of congressional support for specific initiatives or 

programs. 

B. Relationships with Other Federal Agencies 

 

Most of the FTC’s dealings with other federal agencies – like most of the 

Commission’s dealings with state and international agencies – fall into two broad 

categories: policy matters and enforcement cooperation. 

Due to the wide breadth of the FTC’s activities and overlapping jurisdiction in 

certain substantive areas of the law, the FTC has numerous policy and enforcement 

relationships with other federal government entities, including the Department of Justice, 

the Department of Commerce, the Department of State, the federal banking regulators, 

 

213 Id.

214 Id. at 197-98. 

215 Id.

216 See Kovacic, Oversight, supra note 13, at 623-27. 

60
the Consumer Product Safety Commission, the Federal Communications Commission, 

the Securities and Exchange Commission, and the U.S. Postal Inspection Service. 

Referring to the importance of relationships with other national agencies, a 

panelist at the Ottawa roundtable stated: 

[Another relevant criterion] is the effectiveness of the 

relationships between the antitrust authority or authorities 

and other government authorities, especially those in 

overlapping sectors, be it telecom, transportation, energy 

and so on. It is critically important, in my view, looking at 

not just our jurisdictions, Canada and the United States, but 

evolving jurisdictions – and China is but one that you will 

know quite well – to try to avoid unnecessary duplication 

and decisions that may be at odds, in whole or in part, [and] 

different processes and uncertainties that result from 

parallel government bodies looking at similar conduct or 

the same transaction. Ameliorating those differences and 

uncertainties is a sign of great success that an authority 

should recognize. It is very important to investors and 

business communities and stakeholders at large.217 

Through its advocacy program, the FTC advises other federal agencies across a 

wide array of areas, such as food labeling, lending practices, and energy regulation.218 

FTC staff also frequently consults informally with other federal agency staff. Through 

these formal and informal consultations, the FTC has been able not only to coordinate 

efforts with these agencies but also to influence their work – and secure assistance in the 

FTC’s work – in ways that benefit consumers and competition.219 

Relations with other federal agencies are important to the FTC’s consumer 

protection mission because of the overlapping jurisdiction that exists in certain areas (for 

example, the shared jurisdiction over consumer credit with the federal banking agencies) 

and the statutory law enforcement relationships in others (for example, the FTC’s 

 

217 Goldman, Ottawa Tr. at 11-12. 

218 See, e.g., FTC Staff Comments before the Food and Drug Administration in the Matter of Draft 

Guidance for Industry and FDA Staff: Whole Grains Label Statement (Apr. 18, 2006), available at

http://www.ftc.gov/os/2006/04/v060014FTCStaffCommentstotheFDAReDocket No2006-0066.pdf

(involving food labeling); FTC Staff Comments before the Board of Governors of the Federal Reserve 

System in the Matter of Request for Comments on Truth in Lending, Proposed Rule (Apr. 8, 2008), 

available at http://www.ftc.gov/os/2008/04/V080008frb.pdf (involving disclosure requirements in lending 

agreements); FTC Comment before the U.S. Federal Energy Regulatory Commission Regarding Wholesale 

Competition in Regions with Organized Electric Markets (Apr. 17, 2008), available at 

http://www.ftc.gov/be/v070014b.pdf (involving wholesale electric power markets). 

219 See, e.g., U.S. FOOD & DRUG ADMIN., CALORIES COUNT: REPORT OF THE WORKING GROUP ON OBESITY

(2004), available at http://www.cfsan.fda.gov/~dms/owg-toc.html (relying on FTC advocacy and guidance 

on advertising practices and issues affecting obesity). 

61
dependence on the Justice Department to pursue civil penalty cases). The relationship 

between the FTC and the Food and Drug Administration (“FDA”) is an example of a 

relationship that is critical for both entities, as well as for each entity’s stakeholders. 

Both the FDA and FTC are committed to protecting consumer welfare and promoting 

competition in the food and drug industries. The agencies thus have a longstanding 

agreement whereby they coordinate their efforts with respect to the food and drug 

markets.220

 A recent example of effective coordination with another federal regulatory agency 

was the initiation of parallel actions by the FTC and the Federal Deposit Insurance 

Corporation (“FDIC”) against a company charged with deceptive credit card marketing 

targeted to consumers in the subprime lending market.221 The two agencies worked 

together closely, sharing information during their investigations and each using its 

respective authority to address the consumer protection law violations uncovered. Both 

agencies challenged the practices of the primary credit card marketer (which contested 

the jurisdiction of both agencies). In addition, each agency also challenged the conduct 

of related entities subject to its particular jurisdiction – banks that issued the credit cards 

were charged by the FDIC and a debt collection subsidiary of the credit card marketer 

was charged by the FTC. The two agencies coordinated their separate legal proceedings 

and ultimate settlements of the cases. 

 The FTC’s Criminal Liaison Unit is another important aspect of the agency’s 

coordination with other government authorities. The program was created in 2003 to 

spur an increase in consumer fraud prosecutions through more systematic coordination 

between the FTC and criminal law enforcement authorities. The FTC’s CLU reviews 

current investigations and recent FTC litigation to select those cases that involve clearly 

criminal behavior, provides the relevant information to criminal investigators and 

prosecutors, and coordinates joint investigations and prosecutions. Since the creation of 

the CLU, prosecutors have indicted 281 FTC defendants, their associates, or others 

investigated by the FTC for consumer fraud. To date, 191 of these defendants have pled 

guilty or been convicted. Of the 150 defendants who have been sentenced, 38 have 

received prison sentences of more than seven years. Moreover, in Fiscal Year 2008, six 

FTC defendants have received sentences of more than 20 years. 

Participants in the international consultations at the OECD Committee on 

Consumer Policy emphasized that collaborative relationships with other governmental 

agencies are critical to developing sound consumer protection policies. Many of the 

OECD member countries coordinate consumer policy initiatives across their domestic 

government ministries and agencies. For example, Finland, Japan, and Korea have 

intergovernmental working groups that consult on consumer policy issues and develop 

 

220 See Working Agreement Between Federal Trade Commission and Food and Drug Administration, 4 

Trade Reg. Rep. (CCH) ¶ 9850.01 (June 9, 1954).

221 See FTC Press Release, FTC Sues Subprime Credit Card Marketing Company and Debt Collector for 

Deceptive Credit Card Marketing (June 10, 2008), available at

http://www.ftc.gov/opa/2008/06/compucredit.shtm. 

62
multiyear programs.222 Other participants from foreign consumer protection agencies 

emphasized the importance of coordination among agencies that have jurisdiction over 

consumer-related matters from the consumer’s point of view – after all, to a consumer, 

“government is government is government.”223 Participants in the international 

consultations in Mexico City expressed interest in having the FTC serve as an 

intermediary with respect to other U.S. federal agencies (including banking agencies, the 

Federal Aviation Administration, and the FDA) due to the existence of multiple agencies 

in the United States that deal with consumer protection issues.224 These types of issues in 

the international arena point to the importance of strong relationships with other 

consumer-related regulators and law enforcement agencies within the United States. 

In the competition area, the FTC’s most central interagency relationship on the 

federal level is with the Antitrust Division of the Department of Justice. The FTC and 

DOJ have significant overlapping jurisdiction with respect to antitrust enforcement and 

policy. For example, the agencies share antitrust jurisdiction over most mergers and 

business conduct.225 Given these overlaps, the two agencies have developed premerger 

and enforcement clearance and communication procedures to avoid duplicative 

enforcement in competition matters.226 

 The history of the relationship between the two agencies has been marked by both 

agreement and times at which the agencies differed on competition policy. As a recent 

 

222 Consultation with Agency Officials Attending OECD Committee on Consumer Policy Meeting, Oct. 22, 

2008. 

223 Id. 

224 Consultation with Members Attending Iberoamerican Forum of Latin American Consumer Protection 

Agencies, Oct. 8, 2008.

225 The FTC Act is as broad as that of the combined Sherman, Clayton, and Robinson-Patman Acts. See

ABA SECTION OF ANTITRUST LAW, ANTITRUST LAW DEVELOPMENTS 647 (6th ed. 2007) (collecting cases). 

However, certain entities, such as depository institutions and common carriers, as well as the business of 

insurance, are wholly or partly exempt from FTC jurisdiction. See 15 U.S.C. § 45(a)(2). In addition, only 

the DOJ is vested with jurisdiction over criminal violations of the Sherman Act. See U.S. DEP’T OF 

JUSTICE, ANTITRUST DIVISION MANUAL II-3-11 (4th ed. 2008), available at 

http://www.usdoj.gov/atr/public/divisionmanual/index.htm (explaining the scope of the DOJ’s criminal 

antitrust jurisdiction).

226 Although the most extensive attempt to improve the process was abandoned in the face of congressional 

reaction, see Timothy Muris, Comments on the FTC-DOJ Merger Clearance Process Before the Antitrust 

Modernization Commission, at 13-19 (Nov. 3, 2005) [hereinafter Muris, AMC Comments], available at

http://govinfo.library.unt.edu/amc/commission_hearings/pdf/Muris_Statement.pdf (describing criticism 

both agencies received about the agreement and the reasons for its ceasing after only 11 weeks), this 

process has been the subject of ongoing discussion and revision, as the two agencies work together toward 

improving comity while retaining their individual authority within their respective jurisdictions. See

Michael Denger, Caswell O. Hobbs, Janet L. McDavid & Sylvia H. Walbot, 60 Minutes with the 

Honorable Janet D. Steiger, Chairman, Federal Trade Commission, 63 ANTITRUST L.J. 277, 293 (1994) 

(noting the modifications made to the then 45-year-old liaison agreement between the FTC and DOJ 

Antitrust Division regarding which agency would conduct certain investigations). Annually, the agencies 

jointly report the results of their premerger enforcement efforts. See, e.g., FTC & U.S. DEP’T OF JUSTICE,

HART-SCOTT-RODINO ANNUAL REPORT: FISCAL YEAR 2007 (2008), available at 

http://www.ftc.gov/os/2008/11/hsrreportfy2007.pdf. 

63
example of the former, the FTC and DOJ jointly conducted a workshop, drafted a report, 

and pursued enforcement actions in the real estate brokerage area.227 Similarly, the two 

agencies conducted hearings and issued a joint report relating to conduct in the health 

care industry.228 Other examples of the agencies seeking to identify common ground in 

overlapping enforcement areas include the creation of joint guidelines, such as those 

addressing horizontal mergers, collaborations among competitors, and the licensing of 

intellectual property.229 These reports and guidelines were all prepared jointly by the 

FTC and DOJ and reflect symmetrical thinking with respect to the best enforcement 

policies and practices in these antitrust subject areas. 

 There also have been areas of disagreement, which have not only become sources 

of tension between the agencies, but also have created some uncertainty among other 

agency stakeholders. For example, FTC/DOJ discord arose in 2006, when the U.S. 

Solicitor General, with the assistance of the Antitrust Division, advocated in an amicus 

curiae brief that the Supreme Court deny the FTC’s petition for certiorari in the FTC v. 

Schering-Plough matter.230 More recently, in 2008, after working jointly for several 

months in conducting workshops, the two agencies could not reach agreement on a report 

relating to Sherman Act Section 2 enforcement. DOJ independently released a report,231

which the FTC did not join.232 

The international consultations focused on the FTC’s relationship with the DOJ, 

and there was consensus that the different approaches (or perceived differences in 

approaches) by the FTC and DOJ significantly reduced the ability of the U.S. agencies, 

individually or together, to be influential in the international arena.233 Regarding the 

 

227 See FTC & U.S. DEP’T OF JUSTICE, COMPETITION IN THE REAL ESTATE BROKERAGE INDUSTRY (2007), 

available at http://www.ftc.gov/reports/realestate/V050015.pdf (discussing the workshop and competitionrelated issues pertaining to the real estate brokerage industry).

228 See FTC & U.S. DEP’T OF JUSTICE, IMPROVING HEALTH CARE: A DOSE OF COMPETITION (2004) 

[hereinafter DOSE OF COMPETITION], available at 

http://www.ftc.gov/reports/healthcare/040723healthcarerpt.pdf. 

229 These and other joint FTC/DOJ guidelines are discussed in more detail below in Chapter VI.B.5. 

230 See Brief for the United States as Amicus Curiae at 1, FTC v. Schering-Plough Corp., No. 05-273 

(2006), available at http://www.usdoj.gov/atr/cases/f216300/216358.pdf (arguing that the FTC’s petition 

for certiorari should be denied because “the only important but unsettled issues of federal law that are 

raised by the petition are not well presented in this case”).

231 U.S. DEP’T OF JUSTICE, COMPETITION AND MONOPOLY: SINGLE-FIRM CONDUCT UNDER SECTION 2 OF 

THE SHERMAN ACT (2008), available at http://www.usdoj.gov/atr/public/reports/236681.pdf. 

232 See Statement of Commissioners Harbour, Leibowitz, and Rosch on the Issuance of the Section 2 Report 

by the Department of Justice (Sept. 8, 2008), available at

http://www.ftc.gov/os/2008/09/080908section2stmt.pdf; Statement of Federal Trade Commission Chairman 

William E. Kovacic (Sept. 8, 2008), available at

http://www.ftc.gov/os/2008/09/080908section2stmtkovacic.pdf. 

233 See, e.g., Bloom, London Tr. at 166 (“There is an impression internationally that the two agencies are 

not necessarily on the same page when it comes to mergers and unilateral conduct. Now there is some 

strength in having different arguments and debating different sides of an issue, but if you are seeking to 

have a leadership position, that can become quite confusing. So this point is in relation to consistency. 

These are difficult issues but inconsistency does reduce your ability, I think, to be a powerful leader.”). 

64
Section 2 report, for example, while a few observers praised the willingness of the 

agencies to air differences of opinion, the vast majority viewed the divisiveness as 

damaging the efforts of the U.S. antitrust agencies to exercise international leadership.234

 For those within the ambit of both the FTC’s and DOJ’s enforcement 

jurisdictions, comity and consistency of views between the agencies is important because 

it provides certainty for consumers and market participants.235 Also, it can allow the 

agencies to operate more efficiently.236 Thus, as the FTC works to improve its 

performance, it should consider how to improve its relationship with the DOJ to enhance 

the clarity, transparency, and consistency of antitrust enforcement.237 

C. Relationships with State Agencies 

 

 As with federal agencies, the FTC engages with state enforcers and other state 

institutions to address overlapping issues in competition and consumer protection 

enforcement, as well as policy matters. 

On broad policy matters, the FTC often advises state legislatures and agencies 

through advocacy filings.238 Additionally, the Commission sometimes participates in or 

helps organize meetings with the National Association of Attorneys General (“NAAG”) 

to address issues of policy. The first of a series of annual meetings, for example, was 

held on September 21, 2006, when the FTC joined with NAAG to sponsor a workshop, 

 Andreas Reindl also emphasized this point, saying, “if the two agencies cannot agree . . . [t]his undermines 

the leadership role of the agencies,” and further suggesting that other agencies do a better job of 

minimizing the appearance of differences. Reindl, NY Tr. at 116-17. 

234 See, e.g., Gyselen, Brussels Tr. at 113; Vickers, London Tr. at 15; Valentine, London Tr. at 88. 

235 See, e.g., ABA TRANSITION REPORT, supra note 11, at 42-43 (discussing how interagency disagreements 

exacerbate already difficult issues related to antitrust enforcement). 

236 See Muris, AMC Comments, supra note 226, at 11-12 (recounting that after the 2003 clearance 

agreement was reached, Muris received a memo from Robert Jones, the FTC’s Clearance Officer, who 

wrote, “At this moment, for the first time in my tenure as Clearance Officer, perhaps for the first time in the 

modern clearance era, there are no pending clearance requests. None, nada, zip. World peace will 

undoubtedly follow.”).

237 See, e.g., ABA TRANSITION REPORT, supra note 11, at 6, 42-43 (advocating that the two agencies reach 

accords on enforcement clearance issues and consistency on enforcement policies). 

238 See, e.g., FTC Staff Comment before the Massachusetts Department of Public Health Concerning 

Proposed Regulation of Limited-Service Clinics (Sept. 27, 2007), available at

http://www.ftc.gov/os/2007/10/v070015massclinic.pdf (advising against the imposition of rules that would 

prohibit limited-service clinics from advertising, among other things, certain pricing information); Letter 

from FTC Staff to the Rules Committee of the Superior Court for the State of Connecticut (May 17, 2007), 

available at http://www.ftc.gov/be/V070006.pdf (advising against the imposition of rules that may restrict 

competition between attorneys and nonattorneys for services that do not necessarily require the skill or 

knowledge of a lawyer); Letter from FTC Staff to the Office of Court Administration, Supreme Court of 

New York (Sept. 14, 2006), available at http://www.ftc.gov/ os/2006/09/V060020-image.pdf (advocating 

that the Supreme Court of New York adopt attorney advertising rules that would prohibit deceptive and 

misleading advertising without unnecessarily restricting truthful advertising from which consumers may 

benefit). See also infra Chapter VI.B.3. 

65
attended by more than 50 representatives of state attorney general offices, on key issues 

in the petroleum industry. 

On the enforcement side, comity with state antitrust and consumer protection 

agencies has become increasingly important given state involvement in many federal 

enforcement actions. Former Chairman Robert Pitofsky described his experience in this 

area as follows: 

Building on relations with the state attorneys general that 

Janet Steiger had strengthened as Chairman, we recruited 

partners for dozens of sweeps targeting such frauds as 

bogus scholarship referral services, phony prize 

promotions, worthless diet aids, business opportunity 

scams, so called “credit repair” services, scams targeting 

small businesses, and work-at-home schemes.239

Offering a state enforcer viewpoint, Rebecca Fisher of the Texas Attorney General’s 

office stated that in her experience the FTC has placed significant emphasis on 

developing these relationships to the benefit of the states and the FTC.240 Fisher 

explained that, although communication between the federal and state agencies was weak 

20 years ago, she now has good communication with the FTC, which helps in her state’s 

enforcement work.241 

Other roundtable participants stated that the FTC has worked to build 

relationships across boundaries with other enforcement agencies – a natural role for a 

federal consumer protection agency.242 One panelist stated that although the states and 

the FTC are to a large degree doctrinally consistent in their enforcement approaches, in 

his view, the biggest problem is that antitrust enforcement at the state level has become 

more interesting to the attorneys general themselves, which means that decisions about 

enforcement are made at a “political” level rather than an antitrust staff level.243 This can 

make coordination on substantive law more difficult. 

Today, the FTC often conducts investigations jointly with state attorneys general 

because both have an interest in the particular merger or conduct at issue. One panelist 

 

239 Conversation with Muris and Pitofsky, supra note 27, at 793. See also Luehr, Chicago Tr. at 61 

(addressing the importance of law enforcement sweeps: “And you only get that kind of bang for the buck 

both in terms of business education and consumer education if you involve yourself in coordinated actions 

and realize that those coordinated actions provide you with a teachable moment.”). 

240 Fisher, 7/29 DC Tr. at 193-94 (“When I started 20 years ago, I know that the FTC and the states did not 

work together and that was one of the first things I was told when I came to the office. I think we have an 

excellent ongoing relationship now, but we have worked hard to get it. . . . [W]e have put into place some 

very important communication devices, and I think that always helps the relationships.”).

241 Id. 

242 See, e.g., Muris, 7/29 DC Tr. at 26. 

243 Langer, Boston Tr. at 72. 

66
endorsed the benefits of such joint investigations on the ground that state AGs are 

uniquely positioned to recover money on behalf of injured consumers.244 Such joint 

investigations may give rise to two possible sources of conflict, however. First, the FTC 

and the state AGs may disagree on the substantive law and economic analysis that may 

apply to the merger or conduct. Second, the existence of multiple enforcers may result in 

procedural conflicts or differences that raise the costs for the parties as well as the 

agencies.245 There are ways to minimize conflict, however. One panelist, a senior 

attorney in the Illinois AG’s office, explained that although FTC attorneys involved in 

joint investigations are not always experienced in working with states, the FTC usually 

makes strong efforts to have someone with experience on such investigations help 

coordinate the matter.246 

Some commentators have stated that more should be done to develop FTC-state 

relationships. The ABA Transition Report described the present state of these 

relationships in competition enforcement as one that “generally works well.”247 

However, the ABA also called for the FTC, DOJ, and the states to place greater emphasis 

on coordinating competition and consumer protection enforcement to avoid redundancy 

and inconsistent enforcement.248 The ABA recommended that the agencies make it a 

greater priority to establish formal coordination protocols and to resolve differences in 

operational procedures, particularly related to merger review.249

Fisher explained that there are opportunities for the agency to work with state 

AGs in consumer and business education and advocated that the FTC take the lead in this 

area in the future.250 The Commission has in fact done so, working both with NAAG as 

well as individual states.251 A New York AG official suggested that potential areas for 

future collaboration between the FTC and the states include green marketing, alcohol 

 

244 Harrop, Chicago Tr. at 185. 

245 See, e.g., id. at 183-84. 

246 Id. at 182, 184. 

247 ABA TRANSITION REPORT, supra note 11, at 56-57. 

248 Id. (“States are independent enforcers of federal and state antitrust laws. In the context of merger 

review, this overlap in jurisdiction creates the potential for simultaneous investigations of a transaction and 

differing and/or inconsistent enforcement outcomes at both the state and federal levels. . . . The federal 

agencies use the [FTC/DOJ Horizontal Merger] Guidelines. The State AGs, on the other hand, use the 

National Association of Attorneys General Horizontal Merger Guidelines. There are substantive 

differences between the two guidelines, particularly in the areas of market definition, timely entry, and the 

role of efficiencies. The agencies and the State AGs should work to resolve these differences to the extent 

possible.”). 

249 Id. 

250 Fisher, 7/29 DC Tr. at 203. 

251 For example, the Commission has worked on consumer and business education with individual states 

that are involved in the FTC’s enforcement sweeps and task forces. Among notable and recent examples is 

the telemarketing sweep of May 2008, where the Commission provided materials on telemarketing fraud 

for its state partners. See infra Chapter VI.B.8. 

67
marketing, and scrutiny of the relief obtained in private consumer class actions.252 

Former BCP Assistant Director Paul Luehr maintained that there are also new areas in 

which the FTC sometimes should allow the states to “move out in front” and bring the 

first cases; the FTC could then follow the state actions with a federal injunction to ensure 

that there is “a kind of federal bar set across the country.”253

William Brauch of the Iowa AG’s office suggested that the BCP division directors 

make greater efforts to coordinate with AGs’ staff in particular substantive areas.254 

Brauch also discussed how, with respect to specific enforcement actions and general 

policy themes, there is a desire to have state agencies brought into the mix earlier, 

especially when these matters involve overlapping parties.255 In this vein, former BCP 

Deputy Director Teresa Schwartz also suggested that FTC staff receive training and 

broader exposure to other law enforcement agencies, particularly in the area of criminal 

law.256 Fisher also noted that the states have a liaison at the FTC on competition-related 

matters, which has been useful for coordination and planning, and suggested that a 

designated liaison for the states on consumer protection matters may be useful.257

 Disagreements between government bodies will inevitably arise,258 but the 

Commission’s relations with state agencies, like its relations with federal and foreign 

agencies, provide a basis to develop better competition and consumer protection policies 

and to advance enforcement through specific cases. 

D. Relationships with Foreign Enforcement Agencies 

The FTC has dealt with cross-border commerce for over 90 years; it had an 

Export Trade Division in 1918.259 In recent years, though, building and maintaining 

relations with foreign authorities has become an increasingly critical element of the 

FTC’s programs, including its enforcement program. In addition to bilateral relations 

with foreign counterparts, the Commission has developed and expanded multilateral 

relations through such organizations as the OECD, the International Competition 

Network (“ICN”), the International Consumer Protection and Enforcement Network, the 

United Nations Conference on Trade and Development, and regional organizations such 

as the Asia-Pacific Economic Cooperation. This work has been coordinated through 

international shops devoted to competition and consumer protection, previously located 

 

252 Feigenbaum, NY Tr. at 153, 155-56, 202-03. 

253 Luehr, Chicago Tr. at 41. 

254 Brauch, Chicago Tr. at 78. 

255 Id.

256 T. Schwartz, Chicago Tr. at 83. 

257 Fisher, 7/29 DC Tr. at 194-95. 

258 Perhaps the starkest divergences between the FTC and states arise in cases involving state regulatory 

bodies that are restraining competition, but may be protected by the state action doctrine. 

259 See FTC, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 

30, 1918, at 37 (1918), available at http://www.ftc.gov/os/annualreports/ar1918.pdf. 

68
in the Bureaus of Competition and Consumer Protection and the General Counsel’s 

Office, and, since 2007, consolidated in the Office of International Affairs.260

Among other functions, the former Export Trade Division monitored competitionrelated developments in other countries and responded to complaints alleging misconduct 

by domestic firms doing business overseas.261 Today, the Commission engages foreign 

counterparts on policy and enforcement matters. As the recent ABA Transition Report 

noted, “The importance of international cooperation between antitrust agencies in 

ensuring the effective and coherent enforcement of antitrust laws around the world has 

never been greater or more complex to achieve.”262 The Commission’s strong personal 

relationships with foreign counterparts facilitate international cooperation efforts,263

which are important because, as one roundtable participant noted, contact at a personal 

level is “a factor that should not be underestimated in how the whole international 

cooperation process works.”264 

Given the importance of competition as an organizing principle for economies, 

and given such developments as the spread of competition-based regimes around the 

world, the growth of international fraud in the era of the Internet, and the increasing 

transmission in legitimate international commerce of sensitive data for business purposes, 

creating international questions of privacy and data security, the Commission’s 

engagement with foreign governments on policy matters serves to inform the policy of 

other nations. By describing how the U.S. agencies approach various issues, the FTC 

hopes to provide useful information for other nations to consider as they make their own 

choices regarding market-based or regulation-based approaches to policy questions. 

In addition, given the importance of the exchange of ideas and strategies, these 

interactions with foreign counterparts can inform an agency’s domestic agenda and 

practices. Consultation participants articulated a belief that agencies become better at 

 

260 See supra note 108. 

261 Among other things, the Export Trade Division monitored foreign developments and investigated 

foreign complaints against American merchants, reporting 50 such complaints in its 1921 annual report. 

FTC, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED JUNE 30, 1921,

at 63-64 (1921), available at http://www.ftc.gov/os/annualreports/ar1921.pdf. 

262 ABA TRANSITION REPORT, supra note 11, at 16. Indeed, in June 2008, OECD member countries at the 

ministerial meeting in Seoul on the future of the Internet economy recognized the importance of 

international engagement and cooperation and agreed to “[i]ncrease cross-border co-operation of 

governments and enforcement authorities in the areas of improving cyber-security, combating spam, as 

well as protecting privacy, consumers and minors.” OECD, THE SEOUL DECLARATION FOR THE FUTURE OF 

THE INTERNET ECONOMY 9 (2008), available at http://www.oecd.org/dataoecd/49/28/40839436.pdf. 

263 Bourgeois, Brussels Tr. at 95-96. The management of the Canadian Competition Bureau emphasized 

the importance of this point, given the close relationship between the United States and Canada that affects 

both the competition and consumer protection missions. Consultation with Canadian Competition Bureau, 

Sept. 17, 2008. 

264 Brandenberger, Brussels Tr. at 91. 

69
what they are doing by participating internationally.265 Close relationships often 

encourage both the import and export of best practices.266

Many of the overseas consultations highlighted the need for agency leadership to 

have “empathy” or “emotional intelligence.”267 Jorge Padilla, for example, explained 

this capacity as being able to articulate a message in a way that overcomes the audienc

confirmation bias;

e’s 

 

268 Rachel Brandenburger described it as knowing when to lead and 

when to step back and encourage initiatives behind the scenes, stepping on and off the 

gas.269 There was general consensus that when the leadership of the agency has high 

emotional intelligence, is personally, directly, and visibly involved, and is willing to deal 

with international peers one-on-one, it contributes substantially to the effectiveness of an 

agency’s international efforts. 

Beyond matters of broad policy, many important FTC cases involve foreign 

parties, foreign-located evidence or assets, or parallel review with other agencies. Thus, 

effective cooperation with agencies outside the United Sates is a necessity. Mergers and 

business conduct frequently have adverse effects on competition and consumers in more 

than one jurisdiction. Cooperation among the affected jurisdictions avoids conflicts in 

enforcement and leads to effective coordination of measures to eliminate such effects.270 

In the competition area, enforcement cooperation between the FTC and foreign agencies 

has occurred most frequently in merger cases;271 while less frequent, there have been 

significant instances of case cooperation in conduct (for example, monopolization) 

matters as well. In the consumer protection area, the agency has cooperated with foreign 

265 See Bourgeois, Brussels Tr. at 94. Many other participants suggested that agencies, including the FTC, 

must focus resources on imports as well as exports, taking note of better ideas and practices from the rest of 

the world. See, e.g., Aitman, London Tr. at 140; Whish, London Tr. at 147; Fox, NY Tr. at 99; 

Consultation with Israeli Antitrust Authority, Aug. 19, 2008. In addition, roundtable panelists suggested 

international ties across agencies in the research area might be useful to produce new knowledge and to 

spread knowledge about the research results that already exist, but are not well disseminated. See, e.g., 

Sanderson, Ottawa Tr. at 62-64.

266 Temple Lang, Brussels Tr. at 120. See also ABA TRANSITION REPORT, supra note 11, at 16 (“A key 

objective of international cooperation between antitrust agencies is to achieve convergence as far as 

possible (taking into account differences that might exist in each jurisdiction), in rules and standards of 

review and remedies in order to facilitate the conduct of business in the marketplace.”). 

267 See also SLAUGHTER, supra note 209, at 4 (“In a world in which their ability to use hard power is often 

limited, governments must be able to exploit the uses of soft power: the power of persuasion and 

information.”).

268 Padilla, Brussels Tr. at 108-09. 

269 Brandenberger, Brussels Tr. at 95. See also Bourgeois, Brussels Tr. at 125; Koponen, Brussels Tr. at 

126. 

270 See supra Chapter III.C for a more detailed discussion of the FTC’s efforts to gather information from 

foreign authorities. 

271 Recent matters in which the Commission cooperated with foreign authorities include the 

Google/DoubleClick and Owens Corning/St. Gobain merger cases. See FTC, THE FTC IN 2008: A FORCE 

FOR CONSUMERS AND COMPETITION 59-60 (2008), available at

http://www.ftc.gov/os/2008/03/ChairmansReport2008.pdf. 

70
authorities on a variety of cases involving cross-border issues, including consumer fraud. 

One area in particular – telemarketing fraud – has resulted in considerable cooperation 

between the FTC and Canadian authorities.272 International cooperation also has 

emerged as a critical tool for investigations involving spam, spyware, and other online 

threats.273 The FTC has cooperated with foreign counterparts on a number of matters 

implicating consumer privacy and data security issues and continues to develop its 

relationships with foreign authorities to enhance cooperation in such cross-border 

matters.274

As indicated above, the level and quality of interaction is determined in part by 

the rapport agency heads and staff have with their counterparts. Building relationships 

that facilitate cooperation and exchange, however, can be complex. As John Fingleton, 

Chief Executive of the United Kingdom’s Office of Fair Trading, explained, “The 

benefits [of relationships with foreign counterparts] are so diffuse, because they arise in a 

case here, a case there[.] [T]hey turn out to be enormously valuable, but in actual fact it 

is very difficult ex ante to identify that.”275 Moreover, these relationships require 

significant investment. Fingleton continued, “[A] lot of the work that goes on is not just 

about best practice and importing that, but actually having that infrastructure [of agency 

relationships]. You need more lattices than the bare essentials to deal with the fact that 

people change, and the number 2s and the number 3s need to know each other because 

they will be the number 1s in many instances later. So you do need to overinvest I think 

in [the] capacity for that, and that is a difficult thing to justify.”276 

Another important way in which the Commission works with foreign colleagues 

is by providing technical assistance to both younger and more mature agencies. 

Technical assistance projects and programs can allow an agency to improve its 

relationships with foreign counterparts and provide a significant opportunity to engage in 

 

272 The FTC is a participant in six mass-marketing fraud enforcement partnerships with other federal, state, 

provincial, and local law enforcement agencies from the United States and Canada. One recent example of 

effective cooperation among U.S. and Canadian authorities involved 180 law enforcement actions brought 

by authorities in both countries, including the FTC, which targeted deceptive telemarketing practices. See

FTC Press Release, FTC Announces “Operation Tele-PHONEY,” Agency’s Largest Telemarketing Sweep 

(May 20, 2008), available at http://ftc.gov/opa/2008/05/telephoney.shtm. 

273 One example is the FTC’s recent lawsuit against an international spam e-mail network, which involved 

cooperation from law enforcement authorities in Australia and New Zealand. See FTC Press Release, FTC 

Shuts Down, Freezes Assets of Vast International Spam E-Mail Network (Oct. 14, 2008), available at

http://www.ftc.gov/opa/2008/10/herbalkings.shtm. 

274 For example, in 2007, through an OECD Recommendation, the FTC and its foreign partners called for 

strengthening cooperation among privacy regulators and law enforcement authorities to promote greater 

protection for personal information. See OECD, RECOMMENDATION ON CROSS-BORDER CO-OPERATION IN 

THE ENFORCEMENT OF LAWS PROTECTING PRIVACY (2007), available at

http://www.oecd.org/dataoecd/43/28/38770483.pdf. 

275 Fingleton, London Tr. at 161. 

276 Id. at 158-59. Similar statements were made at the consultation with the Canadian Competition Bureau, 

stressing the importance of strong relationships at the case handler level. Consultation with Canadian 

Competition Bureau, Sept. 17, 2008. 

71
the type of export and import activity that promotes cooperation and convergence. The 

FTC has provided technical assistance to countries in the developing world since the 

early 1990s, primarily using funds provided by the U.S. Agency for International 

Development and the U.S. Trade and Development Agency.277 Much of the FTC’s 

assistance has taken the form of placing long-term advisors with newly established 

competition and, in a few cases, consumer protection agencies. Through the use of longterm advisors, FTC staff have been able to build professional rapport and be present at 

“teachable moments” and provide assistance in the context of real cases. In other cases, 

FTC assistance has been in the form of workshops in which we have led officials through 

simulated investigations of competition cases typical of those encountered in developing 

countries or by sharing the FTC’s experience in the application of market-based 

consumer protection law. In many cases, these seminars are coupled with side meetings 

that allow experts and recipients to interface and delve deeper into significant issues. The 

technical assistance program serves the agency’s mission by promoting sound practice 

and policy with other agencies to improve multijurisdictional investigations and actions 

and forge better relations at the staff level. 

The Commission also participates in exchanges in which staff from one agency 

spend several weeks or months at a counterpart agency, and the international 

consultations highlighted the value of such exchanges.278 Staff exchanges were 

perceived as an extremely effective tool to share best practices, solidify bilateral 

relationships, and strengthen enforcement cooperation with foreign counterparts, as we

as adding to an employee’s knowledge base and skills.

ll 

xchanges 

ion. 

 

279 Many foreign counterpart 

agencies use staff exchanges extensively as a way to promote staff development, and, as

noted in Chapter IV.D, development of its own staff is another value of such e

to the Commiss

E. Relationships with Consumers and Consumer Groups 

Consumers are, of course, one of the key constituencies for the FTC. How the 

agency relates to consumers – either directly or through various consumer and advocacy 

groups – is thus a significant factor in the agency’s ultimate success. The agency’s direct 

interactions with consumers are largely limited to receiving complaints from consumers 

and issuing educational materials for use by consumers. A significant means for relating 

to consumers is therefore through interactions with various consumer groups. 

277 For Fiscal Year 2008, Congress appropriated additional funds to the FTC, with the recommendation, for 

the first time, that the agency consider funding technical assistance efforts with a portion of the funds. See

154 CONG. REC. H16054 (daily ed. Dec. 17, 2007), available at http://frwebgate.access.gpo.gov/cgibin/getpage.cgi?position=all&page=H16054&dbname=2007_record. 

278 See, e.g., Bloom, London Tr. at 169; Sanderson, Ottawa Tr. at 55. 

279 See, e.g., Nagy, Paris Tr. at 44. The U.S. SAFE WEB Act enhanced the FTC’s ability to host staff from 

foreign counterpart agencies. Pursuant to this new authority, the FTC established a formal International 

Fellows Program that allows staff from counterpart agencies to spend up to six months at the FTC, working 

with FTC staff on policy and enforcement matters, and for FTC staff to spend time at counterpart agencies. 

In 2007 and 2008, staff from Brazil, Canada, Hungary, Israel, Australia, and Turkey participated in the 

program, and the FTC sent a staff member to the United Kingdom. 

72
FTC advocacy, policy, and education efforts (discussed in greater detail in 

Chapter VI) aid consumers directly and often aid nonprofit and other consumer groups 

advancing similar policies at local levels. Panelists offered various perspectives on 

consumer-focused information provided by the FTC. For example, Michael Kaiser of the 

National Cyber Security Alliance (“NCSA”) discussed how his organization benefits 

from the “constant flow of information from the FTC.”280 Kaiser remarked how the 

FTC’s policy and advocacy efforts in the identity theft area have benefitted NCSA’s 

work with local enforcement agencies, particularly with communicating the serious 

consequences of identity theft, which is an issue some other enforcement agencies have 

been slower to address.281 Beau Brendler of Consumers Union stated that his 

organization relies on the FTC for information it communicates to its members and 

clients, be it through websites, blogs, or other publications.282 Panelist Peter Swire, in his 

written comments, also echoed this sentiment and advocated that the FTC continue its 

efforts of preemptive advocacy to prevent harm to consumers – especially in technology 

areas – before they occur.283 

Kevin DeMarrais, a newspaper journalist, explained how his column – which 

relies in part on information from the FTC – is not necessarily meant to solve consumer 

problems, but rather to point consumers in the direction of information sources that can 

help solve their problems.284 He sees himself as a conduit both for reporting consumer 

problems and communicating the FTC message to consumers.285 DeMarrais explained 

that his readers follow consumer protection issues, but do not necessarily rely on one 

particular source for information or particularly care what the source of the information 

is. This makes it incumbent upon the FTC to communicate its message through as many 

outlets as possible.286 Kaiser added that many consumers seem to access the FTC only 

after something bad happens to them (such as identity theft), and therefore for the agency 

to help consumers stay in front of issues, the FTC needs to keep the advocacy groups and 

media meaningfully informed.287 

Panelists also stressed the importance of ensuring that the means by which the 

FTC provides its information remain up-to-date. Brendler explained that websites 

already are becoming passé, and that to remain relevant the agency must not only be in 

front of issues, but be present in the media on which people rely for information.288 This 

 

280 Kaiser, NY Tr. at 225. 

281 Id. at 226. 

282 Brendler, NY Tr. at 229-30. 

283 See Written Submission of Peter P. Swire, Oct. 29, 2008, at 5. 

284 DeMarrais, NY Tr. at 228. 

285 Id. 

286 Id. at 234-35. 

287 Kaiser, NY Tr. at 235. 

288 Brendler, NY Tr. at 236-38. 

73
means understanding the different gradations or demographics of consumers, the 

information media on which they rely, and preparing the FTC message such that it can be 

understood in the appropriate format for the targeted consumer.289 Brendler suggested 

that the agency consider social networking because consumers – especially younger 

consumers – obtain their information from newer and nontraditional sources.290 Panelist 

Jerry Cerasale suggested that the FTC continue to evaluate ways it can use up-to-date 

technology, such as Twitter-type services, to monitor current topics directly from 

consumers.291 Other panelists stated that the FTC is effective in getting its message out, 

but cautioned that it needs to be cognizant of the ever-changing media landscape, as it is 

easy to fall behind.292 

In addition to getting its message out to consumers, the FTC must consider its 

(two-way) interactions with consumers and consumer groups. Panelist Ari Schwartz 

opined that the FTC’s outreach to consumer groups has been mixed, at best, and should 

be improved.293 Schwartz went on to discuss how greater transparency of agency 

decision making and the inclusion of interested groups in the process would help in 

making FTC actions more effective.294

 Despite the time and costs such collaboration may require, former BCP Deputy 

Director Lee Peeler suggested that successful enforcement results have significant 

impacts, including profound long-term effects on relationships with nongovernment 

stakeholders who may not even be involved in a particular enforcement action.295 

Similarly, DeMarrais cited instances in which he has seen FTC and private litigation over 

certain issues that expand the exposure of a given consumer problem, and thereby give 

the issue greater prominence, staying power, and ultimately more meaning to 

consumers.296

 Cerasale discussed how consumers can be incorporated directly into FTC policy 

and information gathering through consumer surveys, which not only gather information 

regarding potential fraud and other deceptive practices, but also assess how FTC 

messages are received.297 Doing so in collaboration with consumer groups enables the 

agency to focus on issues that are priorities to consumers. 

 

289 Id. 

290 Id. at 236-37. 

291 Cerasale, NY Tr. at 212-13.

292 See DeMarrais, NY Tr. at 247; Brenner, NY Tr. at 247-49. 

293 A. Schwartz, 7/29 DC Tr. at 204-06 (“I think that it was better back in the Pitofsky FTC. . . . I think it 

was much clearer when Jodie Bernstein ran the Consumer Protection Bureau about what is legal, what is 

illegal and what we want in the future. I think that that led to a greater push for industry to do the right 

thing in the self-regulatory space. And then that faded when that push went away.”). 

294 Id. at 219-20. 

295 Peeler, 7/30 DC Tr. at 141-42.

296 DeMarrais, NY Tr. at 242. 

297 Cerasale, NY Tr. at 213-15. 

74
 Panelists suggested that having liaisons within the agency to facilitate 

communication with consumer groups and industry would be a sensible step toward 

building relationships with these constituencies.298 For example, Ari Schwartz endorsed 

the notion of having an “outreach coordinator” to facilitate communications between 

consumer groups and the relevant staff at the FTC.299

The overseas consultations yielded discussions of diverse methods for eliciting 

back-and-forth communication and collaboration with consumer groups and other 

nongovernment organizations. For example, three times a year, the Australian 

Competition and Consumer Commission convenes a meeting of its Consumer 

Consultative Committee, which includes representatives from 14 consumer organizations. 

The ACCC rotates the location city and pays participants a “sitting fee” as well as 

transportation costs.300 Similarly, the Netherlands consumer agency, the 

Consumentenautoriteit, holds stakeholder consultations twice a year, with consumer 

groups and others, to consult on its annual agenda.301 Japan uses an innovative approach, 

employing approximately 1,100 official “registered consumer monitors” who are hired to 

assist the Japan Fair Trade Commission (“JFTC”) in understanding public opinion on 

consumer protection issues.302

In many countries, the government provides financial and other types of support 

for consumer NGOs, which play an important role in shaping consumer policy, helping 

consumers solve problems, and bringing consumer-related legal actions. For example, 

the U.K. provides substantial financial support to Consumer Focus (a new NGO that 

merged the former National Consumers Council, Energywatch, and Postalwatch), which 

plays an active role in studying and formulating consumer policy, as well as providing 

advocacy on specific issues such as open markets, consumer services, and disadvantaged 

consumers.303 New Zealand’s Ministry of Consumer Affairs organizes and provides 

 

298 Brendler, NY Tr. at 257. 

299 A. Schwartz, 7/29 DC Tr. at 200. 

300 Consultation with ACCC, Oct. 2, 2008. The meetings are private but the transcripts are publicly 

available. The consumer members are expected to provide input on issues and processes affecting 

consumers that fall within the scope of the ACCC’s administration of the Trade Practices Act; emerging 

issues or market developments that may be of concern to particular groups of consumers; and information 

dissemination strategies and appropriate external networks available to enhance communication with 

community and consumer groups and consumers. See ACCC, Consumer Consultative Committee, 

http://www.accc.gov.au/content/index.phtml/itemId/800732. 

301 Consultation with Agency Officials Attending OECD Committee on Consumer Policy Meeting, Oct. 22, 

2008. 

302 Consultation with Japan Fair Trade Commission, Sept. 19, 2008. 

303 Consultations with U.K. Department for Business Enterprise and Regulatory Reform and Various U.K. 

Consumer Organizations, Sept. 12, 2008. Additional information regarding Consumer Focus is available at 

http://www.consumerfocus.org.uk. Ofcom, the U.K.’s communications regulator, like some other U.K. 

sectoral regulators, has an independent consumer panel that is funded through compulsory levies on service 

providers. The role of the Ofcom panel is to help “inform Ofcom’s decision-making by raising specific 

issues of consumer interest. These include issues affecting rural consumers, older people, people with 

75
training for a network of consumer representatives and also sources nominations for 

consumer representatives to join the boards of other government agencies and 

committees to promote consumer input into policymaking.304 It also has published 

guidelines on consulting consumers.305 This level of involvement on both policy and 

enforcement issues among government entities and consumer groups is a common model 

in Europe as well as Asia and Latin America. 

 

F. Relationships with Market Participants 

Industry stakeholders rely on the FTC for information and guidance on 

competition and consumer protection enforcement, regulation, and policy. In turn, the 

agency can benefit in its work from the insight, expertise, and cooperation of industry 

groups. Panelists discussed whether the FTC offers useful guidance, whether it gathers 

industry views and suggestions, and whether it coordinates effectively with industry, 

where appropriate. 

Brussels panelist Luc Gyselen reported that DG Comp devotes significant 

resources to maintaining relationships to conduct industry-sector research and learn more 

about industry and anticipate potential competition-related issues.306 Along these lines, 

OFT Chairman Philip Collins suggested that the FTC consider having a liaison with 

industries with which it has significant interaction.307 For example, the ACCC maintains 

in its organization business liaisons drawn from outside the agency. The ACCC 

organizes these liaisons into six specialized consultative committees: consumers, small 

business, franchising, health, infrastructure, and energy. The committees provide 

feedback on the ACCC’s performance and other issues within each relevant industry, as 

well as a means for the ACCC to communicate with the industries regarding its 

enforcement decisions.308

 One key means of coordinating with marketplace participants is through public 

workshops and hearings. These events have proved beneficial in collecting relevant 

industry information, establishing enforcement priorities, and influencing policy 

development.309 Workshops in a wide range of areas – from spam e-mail to childhood 

 disabilities and those who are on low incomes or otherwise disadvantaged.” The Ofcom panel has a budget 

to conduct research in these areas. See Ofcom, Communications Consumer Panel, 

http://www.ofcom.org.uk/about/csg/consumer_panel/role/. 

304 Consultation with Agency Officials Attending OECD Committee on Consumer Policy Meeting, Oct. 22, 

2008. See also New Zealand Ministry of Consumer Affairs, Consumer Representation, 

http://www.consumeraffairs.govt.nz/aboutus/consumer-rep/CRindex.html. 

305 NEW ZEALAND MINISTRY OF CONSUMER AFFAIRS, CONSUMER REPRESENTATION: CONSULTING 

CONSUMERS (2004), available at http://www.consumeraffairs.govt.nz/aboutus/consumerrep/Consulting.pdf. 

306 Gyselen, Brussels Tr. at 17. 

307 Consultation with OFT, Sept. 11, 2008. 

308 Consultation with ACCC, Oct. 2, 2008. 

309 See Peeler, 7/30 DC Tr. at 168; MacLeod, 7/30 DC Tr. at 169. 

76
obesity – not only provided means to coordinate with industry and consumer 

stakeholders, but also allowed the FTC to take a leadership role in resolving concerns 

affecting its constituents.310

 Industry stakeholders can provide useful information to the FTC regarding 

marketplace conduct and developments. Former BCP Director William MacLeod 

emphasized the use of workshops as an effective way to collaborate with industry and 

learn “how the marketplace is working in different areas . . . [to] get a much better idea of 

where [the agency’s] resources ought to be.”311 Further, as panelist Jack Calfee pointed 

out, competitors are usually quick to provide information about a counterpart’s fraud or 

deception.312 MacLeod also discussed an instance in which the gathering of marketplace 

information led to further enforcement action. In the early 1980s, the FTC launched a 

survey to assess Truth in Lending compliance among automobile dealers.313 The agency 

subsequently brought several enforcement actions, after which the agency learned that by 

simply surveying and warning businesses the level of compliance in the industry had 

improved substantially.314 

 As discussed in more detail below in Chapter VI.B.7, another important facet of 

the FTC’s relationship with market participants is the promotion of appropriate industry 

self-regulation, which can serve as an important complement to the agency’s law 

enforcement efforts. As Lee Peeler discussed, relative to law enforcement, industry selfregulation can provide businesses with much quicker issue resolution mechanisms.315 In 

the advertising area, Peeler described the FTC’s encouragement and support for selfregulation as essential to the success of the system now in place.316 

G. Relationship with Academia 

 

Finally, several panelists stressed the importance of reaching out to the academic 

community to spur research in areas of interest to the FTC, which can expand the 

agency’s research resources as well as benefit the participating academics.317 North 

America has the world’s premier academic infrastructure in disciplines related to 

competition law, consumer protection, and economics. Tapping this remarkable asset 

more effectively – and availing the agency of the extraordinary collection of superb 

 

310 MacLeod, 7/30 DC Tr. at 169.

311 Id. at 143.

312 Calfee, 7/30 DC Tr. at 165-66. 

313 MacLeod, 7/30 DC Tr. at 143. 

314 Id. 

315 Peeler, 7/30 DC Tr. at 137-38. 

316 Id. at 166. 

317 See, e.g., Crandall, 7/30 DC Tr. at 202, 271; Salinger, 7/29 DC Tr. at 135-37; Nevo and Carlton, 

Chicago Tr. at 277-87; Elhauge, Boston Tr. at 46-47; Rose, Boston Tr. at 128-29, 134-37; Waddams, 

London Tr. at 68. 

77
academic departments and research centers around the world – through formal and 

informal cooperation can be a source of great advantage to the FTC. 

Although outside academics have been useful in certain agency initiatives,318

panelists expressed some concern that FTC issues are either little known or 

underappreciated by the larger academic community. Former BE Director Michael 

Salinger explained: 

One of the challenges is, particularly if you are looking to 

the economics profession to do a lot of this analysis, 

because a lot of it has to be done by economists in my 

view, the academic wing of the profession is not all that 

interested in the policy issues that the agency faces.319

Thus, research and work that is valuable for purposes of the agency’s enforcement efforts 

may not be appreciated by all members of the academic research community.320

By having its own research agenda, the FTC can potentially stir interest in these 

topics by those in the academy. Salinger explained that he saw great value in bringing in 

members of the academic community for various events, such as workshops, as a way to 

prompt academics both to notify their students and colleagues about FTC issues and to 

inspire research into areas in which the FTC is interested.321 In that vein, one purpose of 

the recently established FTC/Northwestern University Annual Microeconomics 

Conference is to introduce more academics to the FTC and its areas of interest.322 The 

partnership with Northwestern is a prototype for what could prove to be deeper 

integration between the FTC and other academic research centers. 

 New York roundtable panelist Eleanor Fox suggested that the FTC, as have other 

competition agencies, build its relationship with academics to improve analysis of FTC 

research and policy positions and to recruit talented lawyers and economists.323 Former 

General Counsel Debra Valentine suggested a greater role of independent academic 

experts in developing and analyzing FTC policy.324 Panelist Nancy Rose observed that 

often the attraction for academics to engage with any government agency is to obtain 

 

318 See Conversation with Muris and Pitofsky, supra note 27, at 784 (Muris discussing consultations with 

academic experts relative to FTC privacy initiatives).

319 Salinger, 7/29 DC Tr. at 137. 

320 Wright and Picker (Chicago Tr. at 175) noted that certain types of research, such as merger 

retrospectives, will not get the author academic tenure, even if they are valuable to policymakers. 

321 Salinger, 7/29 DC Tr. at 164.

322 See FTC Workshop, First Annual Federal Trade Commission & Northwestern University 

Microeconomics Conference (Nov. 2008), http://www.ftc.gov/be/workshops/microeconomics/index.shtm. 

323 Fox, NY Tr. at 113. 

324 Valentine, London Tr. at 76. 

78
access to interesting data.325 She suggested that in the academic climate today, industrial 

organization research has been focused on complex econometric modeling that may not 

be ideally targeted to the types of issues facing the agency: 

You have to find some way to convince scholars that there 

are significant rewards to them as researchers from 

undertaking this kind of analysis when it’s not the style 

that’s perhaps perceived to generate the greatest rewards 

just within academia. I think we’re very driven in 

academics by the availability of data and particularly new 

data that hasn’t been analyzed and so something like . . . 

[the] suggestion that we have some idea about where cases 

were in the ranking or what determined which cases were 

over the threshold that would let us then look at how 

moving that line affects outcomes might be something that 

would move researchers in that direction. And it might be 

even institutionalizing something like a periodic conference 

that really focuses on questions like this. Sometimes that 

convinces somebody to jump-start a research project 

because they know they’ll be able to present their work at a 

hearing, maybe influence policy and have an outlet for it.326

 Former OPP Director Susan DeSanti, echoing many of the sentiments expressed 

by other panelists relative to FTC relationships with academia, suggested that to build 

relationships with the academic community the agency needs to designate an office to 

maintain these relationships.327 She explained that traditional academics are often 

communicators of ideas, and the agency should be thinking about building the 

relationships from that perspective as well.328 She suggested that these relationships need 

constant monitoring and maintenance, but when they work they can be extremely 

valuable.329 

In some jurisdictions, the consumer protection agency has its own agenda but 

commissions research from outside academics as well as internal specialists. For 

example, DG SANCO, the European Commission’s Directorate for Health and Consumer 

Affairs, often puts out formal tenders for studies in consumer-related areas that are then 

conducted by academic researchers. The U.K.’s OFT also has commissioned academics 

 

325 Rose, Boston Tr. at 106. 

326 Id. at 107-08. The FTC does have authority to share information with academics who serve as 

consultants to the Commission. See Winerman, Paris Tr. at 120 (noting that the FTC has litigated and 

established its ability to turn confidential materials over to academics who sign consulting agreements and 

agree to submit their research to agency review prior to publication); Aluminum Co. of Am. v. FTC, 589 F. 

Supp. 169, 173-75 (S.D.N.Y. 1984). 

327 DeSanti, 7/29 DC Tr. at 165. 

328 Id. 

329 Id. 

79
to prepare studies on certain topics. This approach, of course, may be limited by an 

agency’s resources to fund such research. 

The Japan Fair Trade Commission has concluded that to pursue competition 

policy effectively requires an active interaction between the academic community and 

practitioners, such as the JFTC. To promote this interaction the JFTC established in 2003 

the Competition Policy Research Center (“CPRC”) within its General Secretariat to 

provide a functional and continuous collaborative platform between outside researchers 

and the JFTC staff and to strengthen basic ideas on implementing Japan’s Antimonopoly 

Act. The CPRC promotes interaction on four fronts – between academic knowledge and 

policy implementation, between academics and policymakers, between law study and 

economics, and between Japanese researchers and those overseas. Since 2003, the CPRC 

has produced many international symposia, open seminars, reports, and discussion 

papers.330

* * * 

The FTC has important relationships with several types of outside entities. These 

relationships impact the agency’s performance in various ways, and each requires a 

slightly different approach by the FTC to maintain the relationship. Some relationships – 

such as those with Congress, consumers, and industry – involve interaction and 

communication regarding how the agency pursues its mission. Some relationships – such 

as those with domestic and international agencies – involve coordination in law 

enforcement efforts. Some relationships – such as those with domestic and international 

agencies and the academy – involve efforts by the FTC to research, develop, and promote 

sound competition and consumer protection policy. In any case, the FTC can benefit 

from, and improve its effectiveness with, input from each of these stakeholders. 

 

330 Additional information regarding the CPRC is available at 

http://www.jftc.go.jp/cprc/english/index.html. 

80
V. Agency Leadership, Strategic Planning, and Policy R&D 

The three related topics discussed in this chapter – agency leadership, strategic 

planning, and policy research and development – each have a direct and significant 

impact on the successful functioning of the FTC. Effective leadership at the top of the 

agency sets the tone for how the staff executes the agency’s mission. Strategic planning 

is instrumental to effective deployment of the agency’s resources. Policy research and 

development, including the setting of a research agenda, allows the agency to make wellinformed enforcement and policy decisions. 

In recent decades, the Commission has used a variety of techniques to set plans 

for the use of its resources. These include budgeting and policy planning exercises at the 

Commission level, bureau-level strategic planning, and the extensive use of public 

consultations – workshops, seminars, hearings, and town hall proceedings – to identify 

promising subjects for the agency’s attention. The agency has related what it learns to a 

framework that identifies the full range of agency policy instruments and seeks to devise 

integrated programs that employ all of these capabilities. For example, the agency’s antifraud program in this decade has featured coordinated enhancements of the FTC’s 

consumer education program to encourage precaution taking, a bolstering of cooperation 

with government prosecutors to encourage criminal prosecution of serious wrongdoers, 

improvements in the agency’s Consumer Sentinel database to speed the detection of 

fraud, and the use of the U.S. SAFE WEB authority to ensure effective treatment of 

cross-border misconduct. In this and other areas, the agency consciously has attempted 

to develop integrated strategies to increase the likelihood that misconduct will be detected 

promptly, that misdeeds will be prosecuted effectively, that strong sanctions will be 

imposed, and that potential victims can increase their capacity to avoid injury. 

A. Leadership 

“Leadership can make all the difference in determining whether [an agency will] 

accomplish [its] goals and objectives.”331 Effective leadership involves not only 

understanding the agency mission, structure, and the interests of key stakeholders, but 

also communicating the mission and priorities to agency staff to motivate them to carry 

out the mission of the agency effectively over time.332 Agency leadership also affects 

employee morale, which often dictates agency success. This section discusses areas for 

consideration in evaluating how leadership impacts the agency. 

Former Chairman Timothy Muris explained that the FTC “either runs with a 

strong chairman or it does not run.”333 Commentators have emphasized the important 

leadership role of the Chairman in determining key appointments and setting the 

 

331 ABRAHMSON ET AL., supra note 19, at 2. 

332 Id.

333 Muris, 7/29 DC Tr. at 48. 

81
enforcement and research agendas for the agency.334 In an interview after his tenure was 

complete, former Chairman Robert Pitofsky explained how leadership by his predecessor, 

Janet Steiger, included not only standing up to powerful interests in the private sector, but 

also a willingness to listen to original and innovative proposals that challenged 

conventional thinking.335 Pitofsky also noted that every Commissioner must bring to 

bear his or her own experience, focus, and insights, which for him involved an 

appreciation of past agency failures and an understanding of how to get things done 

through the agency’s structure.336 Muris likewise explained that the Chairman must work 

with the other Commissioners to achieve the mission, which means balancing different 

and sometimes competing interests.337 This can mean making a priority of interests 

promoted by other Commissioners to persuade them to follow the Chairman’s vision for 

the FTC.338

 Commentators also have identified continuity as another important factor in 

effective leadership, both at home and internationally. Pitofsky posited that competition 

leadership is stronger in general due to a decrease in variation from administration to 

administration because policymakers have arrived at a “fairly widespread agreement on 

premises,” particularly in antitrust enforcement.339 OFT Chief Executive John Fingleton 

described continuity of leadership as important to maintaining strength and credibility 

among competition agencies. He recounted a comment by Mario Monti, the former 

Commissioner for Competition at the European Commission, that the American system 

has a revolving door and that the leadership transitions much too quickly.340 As change 

of personnel is inevitable, leaders’ commitment to relative continuity in policy may ease 

some of the concerns over personnel changes and make agency leadership more 

effective.341 However, when those new to enforcement emerge in leadership positions, 

there can be delays in getting things done until people are known and trusted in the 

 

334 See KATZMANN, supra note 76, at 87-97 (discussing the Chairman’s role in setting the agency agenda, 

influencing agency leaders, and directing the budget process). 

335 Pitofsky Interviews, supra note 156, at 121.

336 Conversation with Muris and Pitofsky, supra note 27, at 849-50. 

337 Muris, 7/29 DC Tr. at 49; see also Pitofsky Interviews, supra note 156, at 121-24 (discussing the 

importance of the Chairman working with other Commissioners to both advance the agency’s agenda and 

enable Commissioners to advance their own interests); KATZMANN, supra note 76, at 107-08 (explaining 

the difficulty of setting clear policy with a collegial body of Commissioners, and that policy is often 

enhanced when Commissioners value input from different perspectives). 

338 See Muris, 7/29 DC Tr. at 49-50; Pitofsky Interviews, supra note 156, at 122-23. 

339 Robert Pitofsky, Antitrust at the Turn of the Twenty-First Century: A View from the Middle, 76 ST.

JOHN’S L. REV. 583, 586 (2002). 

340 Fingleton, London Tr. at 157-58. 

341 Muris echoed this theme in his remarks when taking over as Chairman of the FTC. Praising Robert 

Pitofsky as one of the most effective Chairmen in the history of the FTC, Muris explained that, except for 

some changes at the margins, the FTC under his leadership would emphasize continuity: “There will be no 

sea change in enforcement.” Timothy J. Muris, Antitrust Enforcement at the Federal Trade Commission: 

In a Word – Continuity, Speech before the American Bar Association Antitrust Section Annual Meeting 

(Aug. 7, 2001), available at http://www.ftc.gov/speeches/muris/murisaba.shtm. 

82
competition community, which is a consequence any organization must face in 

transition.342 

 

 Complementing leadership at the top, some panelists suggested that the FTC is 

effective because staff, possessing both the expertise in competition and consumer 

protection law and the relative freedom to explore innovative ways to make progress in 

these areas, drive the agency toward stronger leadership. Former BCP Assistant Director 

Paul Luehr described this as a culture and management style that focuses on bottom-up 

integration of leadership.343 Luehr said the culture of the FTC involves “taking good 

ideas from the staff level and letting those percolate to the top, especially with regard to 

the enforcement mission.”344 Recognition of this bottom-up style of management was 

echoed by Teresa Schwartz, who described how former BCP Director Jodie Bernstein 

used her staff as a resource, not just to fulfill the mission as she directed them, but to 

identify ways to fulfill the mission based on their experience.345 Schwartz explained that 

it took managerial leadership to listen to staff, value their input, and encourage them to 

generate ideas on how best to address problems.346

Effective leadership advances the agency’s mission and positively impacts agency 

morale. Greater continuity of leadership can strengthen the agency’s ability to perform 

its mission both in the shorter term and as senior leadership of the Commission changes 

across administrations. 

B. Strategic Planning 

Strategic planning at a government agency involves more than just a 

determination of how insightfully to identify and understand problems that arise, but also 

a determination of how to pick the right tool or right collection of tools (or even the right 

sequencing of tools) to use to address such problems. In the case of the FTC, the agency 

must decide, for example, whether to issue guidelines, bring a case, create rules, or hold 

public consultations to address the various competition and consumer protection 

problems that it faces.347

This section addresses several issues regarding strategic planning and how the 

FTC goes, and should go, about doing it. First, what dictates the agency’s planning? 

Does it depend entirely on having wise Chairs, Commissioners, and bureau directors? 

That is, is the agency’s planning principally a function of who happens to inhabit these 

 

342 The bureaus have made some efforts to maintain continuity in leadership. For example, the relatively 

recent addition of a Deputy Director in the Bureau of Competition, who is not a political appointment, has 

been a step that will likely ensure greater continuity in leadership within BC. 

343 Luehr, Chicago Tr. at 25. 

344 Id.

345 T. Schwartz, Chicago Tr. at 29-30. 

346 Id. 

347 See Kovacic, 7/29 DC Tr. at 55. 

83
positions at different times? Second, what is the proper scope of the agency’s strategic 

planning? Should it involve bureau-by-bureau planning, or should it be an agency-wide 

exercise? Third, should the planning be centralized within the agency? For example, 

should there be a research panel or board within the agency to oversee such planning? 

Fourth, should there be specific procedures in place to develop strategy? For example, 

should the Bureau of Economics take the lead in identifying issues, with ad hoc groups 

within the bureaus gathering to address these issues and ultimately going to the 

Commission with proposals?348 Finally, how does the agency ensure the proper 

implementation of its chosen strategies? 

1. Importance and Goals of Strategic Planning 

The consultations confirmed the importance of strategic planning to the success of 

this, or any other, agency. Former Chairman Muris explained that it is insufficient to 

have a core mission and to define it well; the agency needs a strategy to implement it. 

That strategy requires continual new thinking and innovation.349 Jodie Bernstein echoed 

Muris’ comments, explaining that continual planning and innovation are necessary, citing 

as examples of such planning and innovation the expansion of the agency’s international 

efforts, the expansion of efforts targeting Spanish-speaking media, and the creation of the 

Criminal Liaison Unit.350 Another panelist succinctly characterized strategic planning as 

“absolutely vital.”351

In addition to innovation, roundtable panelists identified policy continuity as 

another important goal of strategic planning. Former General Counsel Debra Valentine 

framed the relevant inquiry as follows: “How can you keep an acute sense of the past 

and the evolving trends so that you can try to keep some strategies going through time, 

notwithstanding the inevitable impulse of the next gang to really want to leave their 

mark?” In other words, how does the agency “keep a thoughtful strategy that ties 

learnings and lessons of the past with sensitivity to trends of the future?”352 Valentine 

observed that, although each agency chair will want to set his or her own strategic 

agenda, policy continuity will provide such chair with “buy-in with the public and the 

consumer.”353 John Fingleton explained that the governance structure of the OFT, which 

has a board composed of a majority of nonexecutives, provides “a certain type of 

 

348 See id. at 28, 35-37. 

349 Muris, 7/29 DC Tr. at 20-21. See also Muris, Principles, supra note 17, at 168 (“Without a general 

strategy and a positive agenda, an agency becomes a passive observer, swept along by external 

developments and temporary exigencies. An institution that merely reacts to circumstances and does not 

work from a coherent philosophy will ultimately fail to achieve lasting success.”). 

350 Bernstein, 7/29 DC Tr. at 26. See also T. Schwartz, Chicago Tr. at 35 (explaining that BCP picked the 

emerging Internet as one of its major focuses, with the result that BCP had a strategic plan, built around the 

high-tech, global marketplace hearings it had held in 1995, that governed the bureau’s priorities over the 

next five or so years). 

351 Brauch, Chicago Tr. at 37. 

352 Valentine, London Tr. at 85. 

353 Id. at 89. 

84
continuity,” as the board is responsible for setting long-term strategy for the agency, 

rather than making individual enforcement and policy decisions, which is left to OFT 

executives.354

The goal of policy continuity, however, does not imply inflexibility in strategic 

planning. Several panelists emphasized the importance of building flexibility into any 

strategic planning efforts. In discussing her efforts in the 1990s, Bernstein explained that 

her planning efforts “set out a roadmap so that I had a sense of where we were going. 

That didn’t mean that there was not flexibility built into the roadmap so that [when] 

things inevitably occur that are not anticipated . . . one would have the ability to deal with 

them.”355 Another panelist explained that “[b]eing able to shift, being able to move and 

being able to adjust to market changes and what’s next” is enormously important.356 An 

agency has to have “the agility to move around that may be a little uncomfortable, but 

gives [it] the ability to respond as the market and other conditions change.”357 The 

Chairman of the U.K. Competition Commission, Peter Freeman, characterized the need 

for flexibility as follows: “[A]s the Duke of Wellington has said, ‘time spent on 

reconnaissance was seldom wasted.’ Also, I think he said words to the effect of ‘all plans 

collapse on first contact with the enemy.’ I think that neatly encapsulates the position 

certainly from our point of view.”358 Strategic planning, Freeman continued, “cannot be 

too rigid and it cannot be too binding. [B]ut everything we do should take place . . . 

against a background of priorities and policy consciousness.”359

2. Strategic Planning at the FTC 

The Commission’s strategic planning efforts include specific enforcement and 

policy agendas brought to the agency by Chairmen, Commissioners, and senior staff; the 

strategic planning done pursuant to the Government Performance and Results Act and 

various other reporting requirements; and senior staff retreats that the Commission has 

held for more than a decade. Other examples of strategic planning include “policy 

review sessions,” which were used in the 1970s and 1980s to permit the Commission 

members and the staff to discuss significant policy issues.360 The Commission recently 

revived this custom in 2008 to discuss how the Commission might address various issues 

concerning the financial crisis. Former Commissioner Thomas Leary described how, 

 

354 Fingleton, London Tr. at 86. 

355 Bernstein, 7/29 DC Tr. at 34-35. 

356 Breul, 7/30 DC Tr. at 31. The Canadian Competition Bureau, for example, maintains a core team, with 

as much as 25 percent of the agency’s resources available to it, to address unforeseen priorities that emerge 

during the three-year course of a planning cycle. Consultation with Canadian Competition Bureau, Sept. 

17, 2008. Philip Lowe from DG Comp similarly suggested that flexible staff movement around the agency 

is an essential component to an effective agency. Consultation with DG Comp, Oct. 21, 2008. 

357 Breul, 7/30 DC Tr. at 31-32. 

358 Freeman, London Tr. at 80. 

359 Id. at 83-84. 

360 See Kovacic, 7/29 DC Tr. at 45-46. 

85
during the early 2000s, the agency used to circulate background papers on advocacy 

issues, such as the state action doctrine, that the Commission anticipated addressing. 

This was not done in the context of specific cases; rather, it was “simply to see if we 

could agree among ourselves on what the Commission policy ought to be ultimately 

when these things arise.”361

Beyond these, perhaps the most intensive form of formal strategic planning at the 

FTC largely has taken place in the Bureau of Consumer Protection. The FTC consumer 

protection mission has a broad reach, protecting consumers in the myriad ways they 

interact with various kinds of businesses. These protections range from requiring that 

advertising claims have a reasonable basis of support to ensuring that consumers receive 

full disclosure of the terms of financial service transactions. To accomplish its mission 

most effectively, BCP targets issues and leverages resources through strategic planning. 

 Bureau-wide strategic planning began in the mid-1990s, and the process has 

become an integral part of how BCP operates. A strategic plan generally covers a 12- to 

18-month period. It encompasses both BCP initiatives and matters that are not 

discretionary, such as reports or rulemaking proceedings mandated by Congress. 

Managers solicit ideas from staff members, who review complaint data, monitor 

advertising, survey market literature, and also obtain information from industry, 

consumer groups, and law enforcement partner agencies, among other stakeholders. 

Ideas also may be generated in connection with workshops or town hall meetings 

conducted by the Commission to explore emerging problems or areas of concern. Staff 

from the regional offices, as well as the seven divisions of BCP, are included in the 

planning process. Some projects cross program lines, requiring coordinated planning by 

staff from two or more BCP divisions. Managers of each division develop a plan, and all 

of the plans are reviewed by all division managers who provide feedback to each other. 

 Plans are then submitted to and ultimately approved or modified by the bureau. 

They become a basis for allocation of resources, including contracts, travel, and staff 

time, and are reviewed during quarterly meetings involving bureau and division 

managers. Plans are not inflexible, but can be revised, as needed, to respond to new 

issues or problems in the marketplace. Evaluation and assessment takes place at the end 

of the planning period, and managers are accountable for their progress in accomplishing 

plan goals. 

Former Chairman Pitofsky recently described this BCP strategic planning as 

follows: 

Jodie Bernstein instituted the strategic planning process at 

the outset of her term as BCP Director. She involved staff 

at all levels of the Bureau and regional offices, giving them 

an opportunity to think broadly about consumer protection 

issues and use their firsthand experience to propose new, 

 

361 Leary, 7/29 DC Tr. at 38-39. 

86
more effective ways of doing things. This inclusive 

process made the final plan a team effort and one that 

reflected the best thinking of our talented staff. The 

strategic plan’s benefits were striking. Among them: the 

establishment of clear law enforcement priorities; the 

identification of the most pressing and the newly emerging 

consumer issues and the best approaches to tackling them; 

the ability to allocate resources to the most serious 

problems; and increased efficiency across the Bureau.362

Turning to strategic planning undertaken elsewhere in the agency, former BE 

Director David Scheffman observed that, even taking into account the resources that must 

be devoted to merger review, the agency has “tremendous latitude” in how to allocate its 

resources, making strategic planning essential.363 Nonetheless, according to former BC 

Director Molly Boast, extensive strategic planning in BC during the late 1990s 

necessarily was a victim of the merger wave of that time and the resulting drain on 

bureau resources. Even when an agency is not faced with such a significant workload, 

Boast observed, strategic planning does “consume considerable resources”; it has to be 

balanced against other uses of agency resources. Nonetheless, ad hoc opportunities for 

strategic planning can be found in the potential cases that the agency confronts. Boast 

cited the example of the pharmaceutical patent settlement cases that first arose in the late 

1990s as an opportunity for BC and the Commission to do an extensive analysis of a 

particular area of competition law and decide on a particular strategy – even if such 

strategy was not necessarily planned in advance.364

Recommendations for future FTC strategic planning offered by roundtable 

panelists involved both the level at which such planning should take place and the inputs 

necessary for such planning. Bernstein recommended that the FTC engage in agencywide – not just bureau-by-bureau – strategic planning because it would “energize” both 

BCP and BC by letting each bureau see what the other’s ideas are. This would address 

the concern Bernstein has with the Balkanization of the agency into bureaus or even 

divisions that do not communicate with each other.365 Former BCP Deputy Director 

Teresa Schwartz echoed Bernstein’s recommendation that strategic planning should take 

place not only at the bureau level, but agency-wide as well.366 

Panelists identified both internal and external sources of information that are 

crucial to effective strategic planning. Bernstein explained that for her one of the 

functions that it served was “to open up the Bureau so that I knew what the best thinkers 

were thinking, what their experience was and how I could build upon that to construct a 

 

362 Conversation with Muris and Pitofsky, supra note 27, at 789. 

363 Scheffman, NY Tr. at 20-21 (cautioning against being “driven by the inbox”). 

364 Boast, NY Tr. at 17-20. 

365 Bernstein, 7/29 DC Tr. at 43. 

366 T. Schwartz, Chicago Tr. at 90. 

87
program that would make good sense . . . .”367 Schwartz concurred as to the importance 

of drawing on the experience and knowledge of staff, which knows “what’s bubbling out 

there.”368 Similarly, Nicholas Hill, Chief Executive of the Commerce Commission of 

New Zealand, explained: “[T]he process we are going through at the moment is very 

much a bottom up one where essentially I’ve outlined as a new chief executive what I 

think the challenge for the organization is at a high level, but essentially put it back on the 

staff to say, so how should we deal with this? At the end of the day, the Commission and 

[I] will make the calls. But it is very much about engaging them, engaging their minds 

and their passion in the organization.”369

 Several panelists, including Bernstein and Schwartz, stressed the importance of 

also including outside entities – including state agencies, congressional staff, consumer 

groups, and industry – in the planning process in order to anticipate where the next 

controversy will be, get relevant information from key stakeholders, and gauge how 

much support the agency will have to take action in a given area.370 Former BCP 

Assistant Director Paul Luehr argued that it is also crucial in doing strategic planning to 

look at relevant data and have that drive (at least in part) the agency’s agenda. For 

example, with the Consumer Sentinel database, the agency can hear from “thousands of 

consumers” about what cases to bring, making the agency’s mission “much more 

coherent.”371

3. Examples of Strategic Planning Efforts at Other Competition 

and Consumer Protection Agencies 

External consultations revealed several examples of strategic planning undertaken 

at other competition and consumer protection agencies. The U.K. Office of Fair Trading 

employs several methods in planning and implementing its overall strategy, and has a 

dedicated “strategy and planning team,” which is engaged in all parts of strategic 

planning development and implementation to help ensure consistency across the agency. 

The strategic planning process begins with the Chief Executive developing strategy and 

plans in consultation with stakeholders, followed by the OFT’s Board, which functions 

similarly to a board of a public company, providing guidance on longer-term policy and 

strategy decisions, rather than specific enforcement decisions, which are taken by the 

Executive. Each year, the Board approves an annual plan for the agency, providing a 

strategic steer and risk assessment that considers the agency as a whole (rather than at the 

 

367 Bernstein, 7/29 DC Tr. at 34. 

368 T. Schwartz, Chicago Tr. at 33. See also id. at 30 (describing how during her tenure (middle to late 

1990s), several innovations found their way up from staff to management, including the complaint center 

and the electronic collection and sharing with enforcement partners of the complaints in Consumer 

Sentinel, law enforcement sweeps, and the global, high-tech marketplace hearings). 

369 Hill, Paris Tr. at 108-09. 

370 See Bernstein, 7/29 DC Tr. at 56-57; T. Schwartz, Chicago Tr. at 33-34; Luehr, Chicago Tr. at 39; Hill, 

Paris Tr. at 107. 

371 Luehr, Chicago Tr. at 42. 

88
level of an individual case or project).372 The resulting priorities then strongly inform the 

decisions of division directors as they prepare annual program plans for their respective 

areas. When the division directors submit proposals for resources, the Executive 

Committee, a group including the Chief Executive and senior executives, assesses the 

overall portfolio of bids against the strategic priorities when deciding how to allocate 

resources. 

Decisions to undertake new work are guided by four “prioritization principles,” 

which the OFT developed following consultation with external stakeholders, including: 

(1) impact, which includes considerations of the likely direct and indirect effects on 

consumer welfare, deterrence, and efficiencies; (2) strategic significance, which entails 

inquiries about whether the given matter fits within the OFT’s strategy or current 

portfolio and whether the OFT – or some other alternative, such as private enforcement 

or self-regulation – is best placed to act; (3) risk (i.e. the likelihood of a successful 

outcome); and (4) resources (i.e. the resource implications of pursuing a particular 

matter).373 Although these principles are neither exhaustive nor applied mechanically, 

they create a common descriptive language to assess and compare agency priorities.374

Closely linked to the OFT’s prioritization principles is the agency’s so-called 

effective project delivery (“EPD”) framework. Developed in response to criticism 

regarding the length of OFT investigations, the agency applies the EPD framework to 

significant projects and cases, in effect, to plan backwards from the desired outcome to 

achieve OFT’s strategic goals. Key components of the framework include a clear 

definition of the project’s scope, deliverables, and deadlines; clarity in roles, 

responsibilities, and resource allocation; and the use of customized steering groups 

comprised of staff from across the agency to provide input on each project and to assess 

the fit of a particular project within the agency’s entire portfolio of matters. The first 

phase of the EPD process, which involves the development of a substantive theory of 

harm and an estimate of the impact of agency action, in particular, is influenced by the 

prioritization principles driving the agency’s overall strategy.375

The European Commission’s DG Comp uses an iterative, top-down—bottom-up 

planning process to prioritize its enforcement matters and allocate staff resources. As 

such, cases are often generated by staff or complainants. DG Comp applies several 

 

372 However, the Board does review high-risk and major projects, providing advice regarding case-specific 

plans for such projects, including timing and milestone plans. The Board also recently initiated a process 

by which the various groups within OFT appear before the Board to report on their respective efforts and to 

discuss their plans, ongoing projects, and any problems that they are encountering. Although it has not 

been entirely systematic, this periodic review by the Board is reported to have been quite productive. 

Consultation with OFT, Sept. 11, 2008. 

373 U.K. OFFICE OF FAIR TRADING, OFT PRIORITISATION PRINCIPLES 8-10 (2008), available at

http://www.oft.gov.uk/shared_oft/about_oft/oft953.pdf. 

374 Consultation with OFT, Sept. 11, 2008. 

375 Id.

89
prioritization criteria – including consumer impact, precedential value, and deterrence – 

in evaluating prospective cases.376

One of the ways in which DG Comp attempts to implement its strategic planning 

is the use of a peer review system to foster intra-agency debate concerning a particular 

matter. A peer review consists of a discussion among the case team originally assigned 

to a matter, a “fresh set of eyes,” often including a case manager and a sectoral expert, 

and an independent scrutiny officer responsible for submission of a written report to 

senior officials. Although these reviews are highly resource-intensive, they allow DG 

Comp to engage staff in a meaningful way in implementing its long-term strategies.377

René Jansen, a board member of the Netherlands Competition Authority, 

described the annual strategic planning process that has been in place at his agency for a 

few years. The process begins with a broad policy framework – developed by the 

agency’s three-person executive board in consultation with the directors of the agency’s 

several offices – that addresses significant administrative and policy issues the NMa 

anticipates over the course of the coming year. The next step in the process involves 

consultations regarding this framework with external stakeholders, including politicians, 

industry, the bar, and academia. The final step of the process includes the development 

of a working plan – based on the broad policy framework – for use by the agency’s 

directors in the following year. The working plan provides the directors with specific 

targets in all areas of the NMa’s work, including enforcement and other policy efforts, as 

well as internal, administrative areas. Jansen expressed satisfaction with this planning 

process, but acknowledged that his agency is continually trying to improve it.378

The Canadian Competition Bureau recently has engaged in a process involving an 

environmental scan that feeds directly into its agenda setting. The Bureau reviews sector 

and marketplace developments to identify potential problems relevant to each of its 

branches. The Bureau’s senior management team analyzes the results of this scan and 

drafts a high-level agenda, which a wider management group then develops in greater 

detail. An operational plan is developed for each of the issues identified. The plan may 

employ a variety of tools, including law enforcement and consumer education, and 

always includes a strategy for measuring success. Finally, a process – managed by a 

steering committee – is in place to ensure that resources are matched to priorities and to 

identify and present to senior management significant issues in the marketplace that merit 

the Bureau’s attention. Staff is able to submit issues and ideas directly to the steering 

committee, thus providing bottom-up input into the Bureau’s prioritization practices. 

Similar to the situation at the FTC, this process is better developed for the Bureau’s Fair 

Business Practices Division (analogous to BCP at the FTC) than it is for its competition 

sections.379

 

376 Consultation with DG Comp, Oct. 21, 2008. 

377 Id.

378 Jansen, Paris Tr. at 102-05. 

379 Consultation with Canadian Competition Bureau, Sept. 17, 2008. 

90
* * * 

Any future evaluation of the FTC’s strategic planning efforts ought to consider 

the following issues. First, what should dictate the agency’s strategic planning? Should 

it be top-down planning through the budget process, bottom-up planning with issues 

originating with bureau management or at lower levels of the bureaus, or Chairmandriven planning? Should it be some combination of those means? Second, what is the 

proper scope of the agency’s planning efforts? Should strategic planning be done 

agency-wide, bureau-by-bureau, or at both levels? Third, should there be a centralized 

locus – for example, a review board – for the agency’s strategic planning? Fourth, should 

there be specific procedures or protocols in place to develop strategy? Finally, how does 

the agency ensure that it is appropriately implementing its strategies? 

C. Policy Research and Development 

This section examines the important role of policy research and development at 

the FTC. An agency that intends to be thoughtful and to consider its policy actions 

seriously must have some ability to analyze the trade-offs inherent in any policy choice. 

That capability can be developed through, among other means, academic-style research, 

information gathering and report writing, and conferences and workshops that bring 

together elements from business, government, consumer representatives, and the bar to 

discuss issues related to FTC policy and law. 

This section first defines the notion of policy R&D and then discusses the several 

goals served by engaging in policy R&D. This section also examines how the agency 

sets a research agenda, including the way in which policy R&D topics have been chosen 

in the past, how they are currently chosen, and how the process might be improved in the 

future. Finally, this section presents a set of specific suggestions for policy research and 

development provided in the course of external consultations. 

1. Defining Policy R&D 

Activities that reasonably could be called “policy R&D” take many different 

forms within the various organizations comprising the FTC. To academic economists, 

“research” sometimes means pursuing the answer to an author-initiated research question 

using state-of-the-art techniques in the hope of publishing the work in a scientific journal. 

That is, however, not the bulk of research at the FTC, or even the bulk of research in the 

FTC’s Bureau of Economics. The notion of policy R&D involves much more. Policy 

R&D includes answering policy-relevant questions posed by Congress or agency leaders, 

as well as addressing issues required by specific statutes. In addition, policy R&D 

includes workshops and conferences aimed at competition and consumer protection 

policy topics. 

Some of the FTC’s policy R&D work is highly analytical in nature; some of it is a 

compilation of academic and policy literature; and some is more largely descriptive of 

91
various informed opinions on policy-relevant questions or the functioning of particular 

markets.380 Some research topics fall into a very specific FTC policy area or an active 

enforcement area – for example, the effects of a particular oil merger on prices. Other 

topics are related to underlying “academic” questions – for example, scale economies in 

some particular industry of interest to the FTC. Most FTC R&D efforts are narrowly 

related to the FTC’s competition and consumer protection missions, although a nontrivial 

portion of the agency’s work historically has been focused on policies of other 

government agencies that have had implications for competition policy, consumer 

protection policy, or consumer welfare.381

Given that the FTC is a law enforcement agency with antitrust and consumer 

protection responsibilities, it is easy to think about all nonenforcement activity as policy 

R&D, but clearly that would sweep in too much by including conferences or workshops 

that bring together industry participants to hear the agency’s view of the state of a 

particular area of the law, reports on the agency’s various activities to Congress, and a 

host of other activities that have little research content or that clearly are not aimed at 

analyzing new policies or variations in current policy. For example, some BCP 

workshops, reports, and presentations, such as the many “red flags” hearings, can be 

characterized as outreach to the business community and are not necessarily oriented 

toward specific policy alterations. Many enforcement-related workshops on debt 

collection and international fraud prevention, as well as annually issued reports on 

various law enforcement activities, are so directly connected to specific areas of 

enforcement that they are probably better thought of as enforcement or enforcement 

R&D, rather than policy R&D. However, almost all of these efforts have some R&D 

component in the sense that learning from the events might trigger some alteration in law 

enforcement policies. Thus, for all intents and purposes, a clear division between 

enforcement efforts and policy R&D does not exist at the FTC. 

2. Goals Served by Policy R&D 

The FTC has a mandate to undertake certain forms of research based on Section 6 

of the FTC Act and the historical report-writing activity of its predecessor entity, the 

Bureau of Corporations.382 That mandate differentiates the FTC from most other 

antitrust or consumer protection agencies in the world in that it enables the agenc

compulsory process to gather data in a context other than law enforcement. From its 

y to use 

 

380 Former BE Director Michael Salinger argued that certain reports that mainly discuss the opinions of 

others, as is true of many FTC workshop reports, are not really research. Salinger, 7/29 DC Tr. at 139-40. 

That may be true in the narrow sense of the term research; such reports are policy R&D, however, in the 

sense that they are compiled with the intention of learning enough facts about a topic to alter policy in 

beneficial ways. 

381 For example, work on regulation topics involving communications, transportation industries, 

international trade restraints, and licensed professions were staples of FTC research programs in the late 

1970s and 1980s. Several studies on the regulation of health claims for foods were undertaken in the 1990s 

and 2000s. 

382 See generally Marc Winerman, The Origins of the FTC: Concentration, Cooperation, Control, and 

Competition, 71 ANTITRUST L.J. 1 (2003). 

92
inception, the FTC carried on a general investigative function that complemented its law 

enforcement activities. The results of the investigations were compiled in reports that 

were intended to shed light on various questionable business practices of the day. That 

activity was the precursor of what is now thought of as research and policy R&D at the 

FTC. As explained below, apart from the primary purpose of answering specific research 

questions, the FTC, including its several components, undertakes research for a number 

of reasons. 

a. Support for Enforcement, Advocacy, and Other Agency 

Efforts 

Research and policy R&D is undertaken to improve agency decision making in 

specific areas, such as law enforcement, rulemaking, and competition and consumer 

protection advocacy. FTC research today is seldom done with an eye toward direct use in 

law enforcement activities. Some reports, however, have been generated in conjunction 

with antitrust-related activities or have led to follow-on legal activity. The use of 

empirical research work to support a complaint in the case of a consummated hospital 

merger is an example of the use of research in enforcement. Also, conceptual work by 

economists at the FTC has helped support the agency’s merger enforcement efforts in 

recent merger litigations.383 Research also has been done on the value of the Do Not Call 

list, when elements of that program were questioned.384 Empirical policy work on health 

claims for foods has provided a firmer basis for FTC policy and for advocacy in the area 

of nutrition labeling. For example, several empirical studies done on food health claims 

during the 1990s and early 2000s provided the basis for FTC advocacy arguments that 

rigid regulatory bans on such claims are not likely to be in the best interest of 

consumers.385 Two consumer research studies of the mortgage market in 2004 and 2007 

were likewise important in providing the agency with insight into the problems that exist 

in the current federally required disclosures made to consumers about mortgage products 

and the terms and conditions of the mortgage debt they acquire.386 Such studies provided 

support for several recent advocacy comments in the consumer credit arena. 

 

383 See, e.g., Daniel P. O’Brien & Abraham L. Wickelgren, A Critical Analysis of Critical Loss Analysis, 71 

ANTITRUST L.J. 161 (2003) (cited in FTC v. Whole Foods Market, Inc., 548 F.3d 1028, 1048 (D.C. Cir. 

2008) (Tatel, J., concurring)). 

384 See, e.g., Keith B. Anderson, The Costs and Benefits of Do-Not-Call Regulations: A Comment on Beard 

and Abernethy’s “Consumer Prices and the Federal Trade Commission’s Do-Not-Call Program,” 26 J.

PUB. POL’Y & MKTG. 144 (2007). 

385 For a discussion of those studies and their role in informing food regulatory policy, see Luke Froeb, 

Daniel S. Hosken & Janis Pappalardo, Economic Research at the FTC: Information, Retrospectives, and 

Retailing, 25 REV. INDUS. ORG. 353 (2004). 

386 See FTC BUREAU OF ECONOMICS STAFF, JAMES M. LACKO & JANIS K. PAPPALARDO, IMPROVING 

CONSUMER MORTGAGE DISCLOSURES: AN EMPIRICAL ASSESSMENT OF CURRENT AND PROTOTYPE 

DISCLOSURE FORMS (2007), available at 

http://www.ftc.gov/os/2007/06/P025505mortgagedisclosurereport.pdf; FTC BUREAU OF ECONOMICS STAFF,

JAMES M. LACKO & JANIS K. PAPPALARDO, THE EFFECT OF MORTGAGE BROKER COMPENSATION 

DISCLOSURES ON CONSUMERS AND COMPETITION: A CONTROLLED EXPERIMENT (2004), available at 

http://www.ftc.gov/os/2004/01/030123mortgagefullrpt.pdf. 

93
Further, to address the proliferation of spam email, the FTC compiled information 

about the problem and possible ways to address it and became a major participant in 

fashioning workable legislation.387 Additionally, the FTC used policy R&D to 

complement its recent enforcement efforts to stop anticompetitive conduct designed to 

delay entry of generic drugs. This combined research and enforcement agenda also 

informed substantive changes to the Hatch-Waxman Act.388 This type of policy R&D 

also is necessary to ensure that FTC actions keep abreast of relevant scholarly learning. 

For example, several panelists discussed the role that the research into advertising in the 

1970s and 1980s played in informing the FTC’s advertising enforcement.389 This 

research also influenced courts and state policymakers on their approach to the regulation 

of advertising. Workshops and research also can demonstrate intellectual leadership. 

The FTC’s workshops on green marketing and food advertising and obesity, for example, 

have helped to establish the Commission as an international leader in these areas.390

 Policy R&D work also has been used as an adjunct to various self-regulatory 

efforts. Bringing information and facts to bear on various policy issues is often an 

effective means of moving policy debates forward. On occasion, firms are induced to 

alter their behavior in desirable ways if the evidence shows a real problem. On the other 

hand, if the evidence indicates that the purported problem is small or nonexistent, then 

resources can be redeployed to more pressing issues. For example, recent BCP projects 

addressing violence in various entertainment media,391 the placement of alcohol 

advertising,392 and food advertising aimed at children393 were an important means of 

shining factual light on topics of current policy interest. 

 

387 The referenced legislation is the Controlling the Assault of Non-Solicited Pornography and Marketing 

Act of 2003, or CAN-SPAM Act, Pub. L. No. 108-187, 117 Stat. 2699 (codified at 15 U.S.C. §§ 7701-

7713). The area of food marketing to children presents another example of where the FTC has conducted a 

workshop, held a follow-up forum, and conducted a major study of promotional expenditures and activities. 

The Commission’s report, Marketing Food to Children and Adolescents: A Review of Industry 

Expenditures, Activities, and Self-Regulation, included not only a great deal of information not previously 

compiled and published, but also recommendations to advance the Commission’s policy goal of promoting 

strong self-regulation by both the food and entertainment industries. See MacLeod, 7/30 DC Tr. at 169 

(citing 2008 FOOD MARKETING REPORT, supra note 203). 

388 See Conversation with Muris and Pitofsky, supra note 27, at 776-78 (Muris noting how the 2002 generic 

drug study helped generate cases and reform of the Hatch-Waxman Act); see also Parker, 7/29 DC Tr. at 

118 (noting that the patent settlement cases were a “good example where there was a policy and then some 

enforcement cases that put meat on the bones”). 

389 See, e.g., MacLeod, 7/30 DC Tr. at 173-74. 

390 See MacLeod, 7/30 DC Tr. at 169; Peeler, 7/30 DC Tr. at 170. 

391 FTC, MARKETING VIOLENT ENTERTAINMENT TO CHILDREN: A REVIEW OF SELF-REGULATION AND 

INDUSTRY PRACTICES IN THE MOTION PICTURE, MUSIC RECORDING & ELECTRONIC GAME INDUSTRIES

(2000) [hereinafter 2000 MEDIA VIOLENCE REPORT], available at

http://www.ftc.gov/reports/violence/vioreport.pdf. 

392 2008 ALCOHOL SELF-REGULATION REPORT, supra note 204. 

393 2008 FOOD MARKETING REPORT, supra note 203. 

94
b. Tool and Skill Development 

To operate effectively, the FTC requires a highly skilled staff, who are able to 

take on research tasks that are sometimes ill-defined and may require inventive 

approaches to problems. Research activities often allow the agency to develop ways to 

better analyze problems that can be used in antitrust or consumer policy settings. Doing 

such analysis in a law enforcement or litigation environment often is difficult or 

impossible; doing it in a research environment is thus necessary. For example, FTC 

economists have been doing research work on demand estimation that may pay off in the 

application of those techniques in competition cases, where demand estimation is 

occasionally a key element in market definition or in predicting the likely effects of a 

merger.394 As another example, empirical research allows the agency to keep up with 

data-moving and econometric techniques that are becoming increasingly essential as 

enforcement of the antitrust and consumer protection laws becomes more data-intensive. 

The ability to handle large data sets and understand how to derive useful implications 

from that data are often the keys to making fact-based decisions in such cases. As 

confirmed by roundtable panelists, an in-house research capability is important to ensure 

that an agency can handle difficult issues that arise frequently in the cases that it 

pursues.395 

c. Development of Industry Expertise 

Research topics often allow the agency to gain a better understanding of 

industries, including those, such as energy and health care, which feature prominently in 

the agency’s law enforcement agenda. For example, the agency’s gasoline and diesel 

price monitoring project allows the agency to track changes over time in price-cost 

margins and to notice anomalies in prices in various cities or regions.396 Although 

checking for such anomalies is now routine, this effort initially was a policy R&D 

project. Policy R&D also has been in evidence at the FTC in the health care area for over 

30 years. Recent examples include the 2003-2004 hearings that led to the report, 

Improving Health Care: A Dose of Competition,

397 as well as a 2006 BE workshop on the 

economics of the pharmaceutical industry.398 These R&D efforts are intended to help the 

agency understand whether and how markets can be part of the solution to vexing health 

care policy questions. 

Other R&D projects are designed to gain information about industries that the 

agency expects to be important in its future enforcement and policy efforts. For example, 

 

394 See, e.g., Steven Tenn & John Yun, Biases in Demand Analysis Due to Variation in Retail Distribution, 

26 INT’L J. INDUS. ORG. 984 (2008). 

395 See, e.g., Waddams, Valentine, and Vickers, London Tr. at 75-78. 

396 See supra note 187. 

397 DOSE OF COMPETITION, supra note 228. 

398 FTC Bureau of Economics, Roundtable on the Economics of the Pharmaceutical Industry (Oct. 2006), 

http://www.ftc.gov/be/workshops/pharmaceutical/pharmaceutical.shtm. 

95
the 1999 BE pharmaceutical report399 describing the industry and its idiosyncrasies was a 

precursor to much of the agency’s work in the area of pharmaceutical patent settlements, 

which have become a major component of the FTC’s competition law enforcement 

program. Work by OPP likewise provided insights into aspects of industries with which 

the agency will be dealing for the foreseeable future. These efforts include examination 

of the antitrust and consumer protection implications of broadband Internet access400 and 

investigation of the effects of government restrictions on entry into online retailing.401

d. Improvements in Economic Learning Applicable across 

Markets 

Research projects additionally help agency personnel gain insight into the effects 

of practices that span many industries and product markets. For example, various BE 

staff have undertaken a research project to examine dynamic oligopoly models.402 Such 

models lie at the intersection of both theoretical and empirical economic research on 

markets, and understanding such issues may help the agency untangle knotty problems in 

the dynamics of gasoline and refined products pricing (for example, the analysis of 

asymmetric price variations in gasoline markets). A recent behavioral economics 

conference is another example of policy R&D at work.403 In that conference, the agency 

tried to learn from some of the top researchers in that field, while at the same time 

providing the researchers with some notion of work that the FTC undertakes in the 

consumer protection area that considers (implicitly perhaps) the principles of behavioral 

economics.404

e. Horizon Scanning 

Policy R&D efforts at the FTC serve the important purpose of scanning the 

horizon for future competition and consumer problem areas. As discussed in Chapter 

III.C, the agency gathers relevant industry and marketplace information by convening 

 

399 FTC BUREAU OF ECONOMICS STAFF, ROY LEVY, THE PHARMACEUTICAL INDUSTRY: A DISCUSSION OF 

COMPETITIVE AND ANTITRUST ISSUES IN AN ENVIRONMENT OF CHANGE (1999), available at

http://www.ftc.gov/reports/pharmaceutical/drugrep.pdf. 

400 See FTC STAFF, BROADBAND CONNECTIVITY COMPETITION POLICY (2007), available at

http://www.ftc.gov/bc/tech/cable/broadband.htm. 

401 See FTC Workshop, Possible Anticompetitive Efforts to Restrict Competition on the Internet (Oct. 

2002), http://www.ftc.gov/opp/ecommerce/anticompetitive/index.shtm. 

402 See, e.g., Michael R. Baye, Antitrust Economics and Policy: Some Suggestions for Research Agendas, 

Keynote Address at the Research Symposium on Antitrust Economics and Competition Policy, 

Northwestern University Searle Center on Law, Regulation, and Economic Growth, at 33-42 (Sept. 26, 

2008), available at http://www.ftc.gov/speeches/baye/080926antitrustnw.pdf. 

403 See FTC Bureau of Economics, Conference on Behavioral Economics and Consumer Policy (Apr. 

2007), http://www.ftc.gov/be/consumerbehavior/index.shtml. 

404 Roundtable panelists discussed the FTC’s behavioral economics work. Lee Peeler indicated that the 

Bureau of Economics should have moved sooner to take a leadership role on this topic to avoid an 

overemphasis on the area (Peeler, 7/30 DC Tr. at 182-84), while Jack Calfee praised the reluctance of the 

FTC to jump into that area too early and with too much gusto (Calfee, 7/30 DC Tr. at 184-87). 

96
conferences, workshops, and hearings to address current and emerging competition and 

consumer protection issues. Such events have become an important means through 

which the Commission and its staff identify problems and develop appropriate responses. 

For example, since the mid-1990s, BCP has conducted dozens of workshops and 

conferences focusing on Internet and consumer privacy issues, keeping the agency closer 

to the frontier of a quickly changing marketing environment. Similarly, OPP has chosen 

topics for workshops and reporting with an eye toward important future topics. For 

example, a recent OPP effort along these lines was a conference on new methods of 

health care delivery that examined progress on electronic medical records and the advent 

of limited-service medical clinics.405

f. Self-Assessment 

Another reason the FTC undertakes policy R&D is to examine the outcomes of 

certain policy choices and help the agency assess how well it has done. The FTC, via its 

Bureau of Economics, has undertaken retrospective studies in the merger area,406 in 

resale price maintenance, and in the area of vertical restraints.407 Also in the competition 

realm, the 1999 study of the divestiture process by the Bureau of Competition stands ou

as a useful effort to determine whether the process passed at least a minimal standard 

efficacy.

t 

for 

 

408 As discussed below in Chapter VII.B.2, the FTC’s consumer protection and 

competition advocacy program is one of the most self-examined of all FTC activities. 

Through the work of one independent researcher and various internal surveys conducted 

by the Office of Policy Planning or its predecessors, multiple reviews have been 

conducted on the program to examine its value, as measured by surveys of the recipients. 

g. Intellectual Leadership and Learning from Others in 

the International Policy Arena 

As noted in Chapter IV.D, various Commission efforts – including the 

Commission’s participation in international policy-related R&D efforts – allow the 

agency to influence sound competition and consumer protection policies through the 

import and export of policy views and enforcement practices. 

405 See FTC Workshop, Innovations in Health Care Delivery (Apr. 2008), 

http://www.ftc.gov/bc/healthcare/hcd/index.shtm. Other nations are taking an even more direct route 

toward predicting future competition and consumer issues. For example, the U.K. OFT recently 

commissioned a project to define the upcoming issues that will likely affect consumers. See U.K. OFFICE 

OF FAIR TRADING, CONSULTATION ON EMERGING TRENDS: A REPORT PREPARED FOR THE OFT BY GFK

NOP (2008), available at http://www.oft.gov.uk/shared_oft/about_oft/oft1000.pdf. 

406 Retrospective work in the merger area has been done since at least the early 1980s. Several recent 

merger retrospectives have focused on various refined products markets in the oil industry and on hospital 

markets. See hospital merger retrospectives cited infra note 718. 

407 For a discussion of several self-assessments undertaken by the FTC and certain other government 

agencies, see William E. Kovacic, Using Ex Post Evaluations to Improve the Performance of Competition 

Policy Authorities, 31 J. CORP. L. 505 (2006). 

408 See FTC STAFF, A STUDY OF THE COMMISSION’S DIVESTITURE PROCESS (1999) [hereinafter 1999

DIVESTITURE STUDY], available at http://www.ftc.gov/os/1999/08/divestiture.pdf. 

97
 A good example of the FTC’s leadership efforts in international competition 

policy is the FTC’s work building consensus in the International Competition Network, 

an organization dedicated to facilitating dialogue and convergence toward sound 

competition policy and enforcement that includes as its members nearly all of the world’s 

competition agencies. In the course of developing work product of practical utility to its 

members, the ICN collectively studies issues that are susceptible to multiple approaches 

so that its members can better understand their implications and seek consensus about 

how to address them. The FTC was a founding member of the ICN and dedicates a 

significant portion of its international antitrust work to ICN activity. Under FTC 

chairmanship, for example, the ICN developed recommended practices on merger 

notification and review procedures409 and today continues work related to their 

implementation. These recommended practices, designed to reduce the costs and burdens 

of multijurisdictional merger review, have become the international benchmark in merger 

review, and more than 40 of the ICN’s members have introduced changes to bring their 

merger regimes into greater conformity with the practices since their adoption. The FTC 

also co-chairs the ICN’s group dealing with unilateral conduct, which is acknowledged to 

be the most controversial area of antitrust policy, and achieved consensus on 

recommended practices for the assessment of dominance and on the application of 

unilateral conduct rules to state-created monopolies.410 

 

A prime example of consumer protection work in a multilateral organization is the 

FTC’s work on various OECD Council Recommendations, which have had a substantial 

impact on the national laws in OECD countries. The FTC took a leading role in the 

research and related work leading to the OECD Council’s adoption in 2003 of a 

Recommendation on protecting consumers across borders against fraud and deception.411 

The Recommendation was based in part on empirical input provided by the International 

Consumer Protection Enforcement Network, which FTC staff took a lead role in 

generating. This work has had a substantial impact on national legislation: the 

Recommendation and underlying research served as the basis for both the United States 

and the European Commission to pass new laws governing cross-border information 

sharing and investigative assistance in consumer protection matters, including the U.S. 

SAFE WEB Act of 2006412 in the United States and the Consumer Protection 

 

409 ICN MERGER WORKING GROUP, RECOMMENDED PRACTICES FOR MERGER NOTIFICATION AND REVIEW 

PROCEDURES (2006), available at

http://www.internationalcompetitionnetwork.org/media/archive0611/mnprecpractices.pdf. 410 See ICN UNILATERAL CONDUCT WORKING GROUP, DOMINANCE/SUBSTANTIAL MARKET POWER 

ANALYSIS PURSUANT TO UNILATERAL CONDUCT LAWS: RECOMMENDED PRACTICES (2008), available at

http://www.internationalcompetitionnetwork.org/media/library/unilateral_conduct/Unilateral_WG_1.pdf. 

411 OECD, GUIDELINES FOR PROTECTING CONSUMERS FROM FRAUDULENT AND DECEPTIVE COMMERCIAL 

PRACTICES ACROSS BORDERS (2003), available at http://www.oecd.org/dataoecd/24/33/2956464.pdf. This 

work was an outgrowth of the 1999 OECD guidelines in the area of electronic commerce. See OECD, 

GUIDELINES FOR CONSUMER PROTECTION IN THE CONTEXT OF ELECTRONIC COMMERCE (1999), available at

http://www.oecd.org/dataoecd/18/13/34023235.pdf. The FTC also played a leading role in developing 

those guidelines. 

412 Pub. L. No. 109-455, 120 Stat. 3372 (codified as amended in scattered sections of 15 U.S.C.). 

98
Cooperation Regulation413 in Europe. Following the issuance of the Cross-Border Fraud 

Recommendation, the FTC played a pivotal role in developing the background research 

for the OECD Council’s adoption in 2007 of a Council Recommendation on Dispute 

Resolution and Redress.414 Like the Cross-Border Fraud Recommendation, the Dispute 

Resolution and Redress Recommendation is serving as a basis for strengthening 

consumer redress mechanisms in other jurisdictions.415

Also within the OECD, the FTC has significantly contributed to work in the 

privacy and data security area. For example, the agency worked closely with its 

counterparts within the OECD’s Working Party on Information Security and Privacy in 

an effort to promote greater cooperation among privacy regulators and law enforcement 

authorities to promote greater protection for personal information. This effort, which 

began with research, a written report, and a roundtable discussion, led to the 2007 OECD 

Recommendation on Cross-Border Co-operation in the Enforcement of Laws Protecting 

Privacy,416 which provides guidance on how to improve cooperation in this area. 

The same approach also has been used in the FTC’s bilateral relations with other 

nations. Since the early days of their relationship under the 1991 EC-U.S. cooperation 

agreement, the FTC, DOJ, and the European Commission have jointly conducted studies 

– for example, of merger notification requirements, merger remedies, and retrospective 

reviews of merger remedies – to better understand each other’s rules and procedures and, 

thereby, foster cooperation and coordination in parallel merger reviews. In 2001, the 

General Electric/Honeywell merger case exposed a significant divide between the U.S. 

and European approaches to nonhorizontal merger analysis.417 Rather than allow their 

differences to fester and possibly threaten other transactions, the FTC, DOJ, and the EC 

jointly embarked on a project to study their approaches to mergers, both substantive and 

procedural, with a focus on nonhorizontal issues (where there appeared to be the greatest 

potential variance). 

 

413 Regulation (EC) No. 2006/2004 of the European Parliament and of the Council of 27 October 2004 on 

cooperation between national authorities responsible for the enforcement of consumer protection laws, 

available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32004R2006:EN:HTML.

414 OECD, RECOMMENDATION ON DISPUTE RESOLUTION AND REDRESS (2007), available at

http://www.oecd.org/dataoecd/43/50/38960101.pdf. 

415 The European Commission, for example, has focused on exploring individual judicial and collective 

redress mechanisms for consumers since the issuance of the OECD Dispute Resolution and Redress 

Recommendation. A summary of the ongoing work on collective redress mechanisms is available at 

http://ec.europa.eu/consumers/redress_cons/collective_redress_en.htm. 

416 OECD, RECOMMENDATION ON CROSS-BORDER CO-OPERATION IN THE ENFORCEMENT OF LAWS 

PROTECTING PRIVACY (2007), available at http://www.oecd.org/dataoecd/43/28/38770483.pdf. 

417 See, e.g., William J. Kolasky, Deputy Assistant Attorney General, Antitrust Division, U.S. Department 

of Justice, Conglomerate Mergers And Range Effects: It’s A Long Way From Chicago To Brussels, 

Address before George Mason University Symposium (Nov. 9, 2001), available at

http://www.usdoj.gov/atr/public/speeches/9536.htm. 

99
h. Reporting on Agency Activity 

A portion of the FTC’s policy R&D work is focused on describing what the 

agency does. Although this work is not always thought of as research, it increases the 

transparency of the agency’s processes and decision making. For example, efforts at 

providing enforcement guidelines (on the antitrust side) and industry guides (on the 

consumer protection side) fall into this category, as do the occasional closing statements 

regarding FTC merger cases that are not pursued.418

i. Fostering FTC-relevant Academic Research 

Finally, as discussed in more detail above in Chapter IV.G, by having an agencyspecific research agenda, the FTC can answer questions not necessarily addressed by 

academics, as well as potentially stir interest in such topics on the part of members of the 

academy. 

3. Setting a Research Agenda 

Given the prominent role of policy research and development at the FTC, having 

a systematic means for identifying and planning relevant research is imperative. This 

section reviews historical and current approaches to selecting research topics at the 

agency, as well as considerations for setting a research agenda. This section concludes 

with a review of research topics that were proposed in the course of external 

consultations. 

a. Historical Selection of Research Topics 

The FTC’s broad jurisdiction over industry implies a very broad array of possible 

research areas. In its early years, most general investigations undertaken by the FTC 

were based on requests from the President or from Congress. Even after the Commission 

began to initiate numerous studies on its own, many investigative reports continued to be 

undertaken based on congressional requests. The pattern of external requests changed in 

the post-World War II era, when many more reports were begun under Commission 

auspices. Whatever the cause,419 congressional requests decreased and the Commission 

 

418 Guidelines and industry guides are discussed in more detail in Chapter VI.B.5; closing statements are 

discussed in more detail in Chapter VI.B.1. 

419 At a 2003 BE history roundtable, two former BE directors discussed the decline of congressional and 

presidential requests for reports. Michael Lynch argued that the decline was likely the result of competition 

in report writing from an increasing number of congressional staffers and from the advent of other 

organizations which operated in areas of traditional FTC focus, such as oil, meat packing, and agricultural 

products. BE History Roundtable, supra note 125, at 175-77. Organizations such as the Government 

Accountability Office, Congressional Budget Office, and the Energy Information Agency have economic 

analysts and other researchers who can undertake microeconomic research and are available to Congress to 

write reports. An alternative theory for the decline in presidential and congressional requests, put forward 

by Willard Mueller, was that an increase in industry influence resulted in a reduction in such requests. Id.

at 177-79. 

100
itself became a larger source of ideas for studies in the 1940s and the level of reporting in 

general fell. 

Ideas for research topics from within the FTC have come from many sources. 

Several studies have been essentially staff-initiated; many have been projects promoted 

by the agency Chairman or the Commission; and others have been sponsored by multiple 

bureaus. It is often difficult to identify a single source of a research idea. Often the 

specific ideas come from staff, but with encouragement from agency leaders who may 

have identified general areas for investigation. Other times, ideas for studies follow from 

previous projects. In other instances, congressional interest, if not a direct congressional 

request, might instigate a study. 

b. Current Approach to Research Topic Selection 

As was true historically, in more recent times FTC research ideas have come from 

a variety of sources. One apparent change, however, has been a recent increase in the 

number of congressional mandates for research of various types. During the past few 

years, a large portion of the research work has been generated by presidential or 

congressional requests for examinations of various competition and consumer protection 

issues. Such work has included, for example, competition in the contact lens 

marketplace,420 the levelness of the playing field for the U.S. Postal Service and its 

private market rivals,421 grocery retail slotting allowances,422 and media violence.423

Beyond these external requests, much recent FTC research has been initiated by 

the agency’s Chairs. Such Chair-initiated work has included policy R&D efforts 

involving the implications of the state action doctrine for competition law enforcement 

and regulation,424 health care competition and information issues,425 and various efforts 

to improve the transparency of the merger review process by releasing data on recen

merger decisions and analyses of such data.

t 

 

426 The 1996 reports on competition and 

420 See FTC, THE STRENGTH OF COMPETITION IN THE SALE OF RX CONTACT LENSES: AN FTC STUDY

(2005), available at http://www.ftc.gov/reports/contactlens/050214contactlensrpt.pdf.

421 See FTC, ACCOUNTING FOR LAWS THAT APPLY DIFFERENTLY TO THE UNITED STATES POSTAL SERVICE 

AND ITS PRIVATE COMPETITORS (2007), available at http://www.ftc.gov/os/2008/01/080116postal.pdf. 

422 See FTC STAFF, SLOTTING ALLOWANCES IN THE RETAIL GROCERY INDUSTRY: SELECTED CASE STUDIES 

IN FIVE PRODUCT CATEGORIES (2003), available at

http://www.ftc.gov/os/2003/11/slottingallowancerpt031114.pdf. 

423 See 2000 MEDIA VIOLENCE REPORT, supra note 391.

424 See FTC STAFF, REPORT OF THE STATE ACTION TASK FORCE (2003), available at 

http://www.ftc.gov/os/2003/09/stateactionreport.pdf. 

425 For a description of some of the FTC’s policy R&D efforts in the health care area, see 

http://www.ftc.gov/bc/healthcare/research/behealthcare.htm. 

426 See, e.g., FTC, HORIZONTAL MERGER INVESTIGATION DATA, FISCAL YEARS 1996-2007 (2008), 

available at http://www.ftc.gov/os/2008/12/081201hsrmergerdata.pdf. 

101
consumer protection policy in the twenty-first century in a global, high-tech marketplace 

were other notable Chairman-initiated endeavors.427

Non-Chairman Commissioners also have participated extensively in the 

formulation of policy R&D projects, such as the examination of the municipal provision 

of Wi-Fi Internet connectivity technology,428 a recent workshop on the appropriate scope 

of the “unfair methods of competition” language in Section 5 of the FTC Act,429 and a 

workshop on vertical restraints currently in development.430

As has been true throughout the history of the FTC, many recent agency research 

projects have been staff-initiated.431 A few recent examples include comparisons over 

time of television-based food marketing to children,432 the effects of various regulations 

on the provision of information in food advertising,433 and a customer survey of rent-toown transactions.434

In the recent past, the research production process within the agency largely has 

been handled independently by each economic or legal organization. The choices of 

topics and the approach to the research problem are generally decided within each group. 

For example, within the Bureau of Economics, research projects are sometimes initiated 

by economists who have been given small grants of time to undertake undirected 

research. This research is monitored twice each year, but the review is intentionally 

light-handed. As the projects within BE get larger and more formal, more review is 

undertaken. For example, if an economist wanted the FTC to purchase relatively low-

 

427 See FTC STAFF, ANTICIPATING THE 21ST CENTURY: COMPETITION POLICY IN THE NEW HIGH-TECH,

GLOBAL MARKETPLACE (1996), available at http://www.ftc.gov/opp/global/report/gc_v1.pdf; FTC STAFF,

ANTICIPATING THE 21ST CENTURY: CONSUMER PROTECTION POLICY IN THE NEW HIGH-TECH, GLOBAL 

MARKETPLACE (1996), available at http://www.ftc.gov/opp/global/report/gc_v2.pdf. 

428 See FTC STAFF, MUNICIPAL PROVISION OF WIRELESS INTERNET (2006), available at

http://www.ftc.gov/os/2006/10/V060021municipalprovwirelessinternet.pdf. 

429 See FTC Workshop, Section 5 of the FTC Act as a Competition Statute (Oct. 2008), available at

http://www.ftc.gov/bc/workshops/section5/index.shtml. 

430 See FTC Press Release, FTC Announces Public Workshops for Next Year on Resale Price Maintenance 

(Oct. 28, 2008), available at http://www.ftc.gov/opa/2008/10/rpmwksp.shtm. 

431 Staff-initiated projects are often influenced generally by overall agency preferences for research. For 

example, without naming a particular research area or research question, a Chairman who indicates an 

interest in research in broad areas of policy can induce effort by the staff to find projects that fit in those 

policy areas. 

432 See FTC BUREAU OF ECONOMICS STAFF, DEBRA J. HOLT, PAULINE M. IPPOLITO, DEBRA M.

DESROCHERS & CHRISTOPHER R. KELLEY, CHILDREN’S EXPOSURE TO TV ADVERTISING IN 1977 AND 2004:

INFORMATION FOR THE OBESITY DEBATE (2007), available at http://www.ftc.gov/os/2007/06/cabecolor.pdf. 

433 See FTC BUREAU OF ECONOMICS STAFF, PAULINE M. IPPOLITO & JANIS K. PAPPALARDO, ADVERTISING 

NUTRITION & HEALTH: EVIDENCE FROM FOOD ADVERTISING 1977-1997 (2002), available at 

http://www.ftc.gov/opa/2002/10/advertisingfinal.pdf. 

434 See FTC BUREAU OF ECONOMICS STAFF, JAMES M. LACKO, SIGNE-MARY MCKERNAN & MANOJ 

HASTAK, SURVEY OF RENT-TO-OWN CUSTOMERS (2000), available at

http://www.ftc.gov/reports/renttoown/renttoownr.pdf. 

102
cost data for a project, then the research would be reviewed by an ad hoc research 

committee prior to initiation of the project. Parties outside BE, however, usually would 

not be consulted. As projects increase in scope, the BE director and the Chairman’s 

office eventually get involved. If data were to be obtained via compulsory process of 

some sort, the relevant legal bureau and the General Counsel’s office also would become 

immersed in that aspect of the project. 

Similarly, other agency units – such as OPP, the BC Policy and Coordination 

Office, and the General Counsel’s Policy Studies group – generate, monitor, and produce 

their own research products. Even if the policy R&D projects are assigned to the 

organization rather than internally generated, the plans for the project are typically 

reviewed only within each organization (apart, of course, from informing the Chairman 

and any organization leadership). The organizations typically do not turn to others for 

review of their proposals or methods. Certain large projects might involve staff from 

other organizations – particularly economists if data manipulation or analysis is involved 

in the study – however, there would not typically be much cross-organization review of 

the study proposal or study methods.435

c. Considerations for Setting a Research Agenda Going 

Forward 

There are several steps in the research process, including defining the broad topic 

areas of interest for research, generating interesting, policy-relevant, and achievable ideas 

within a topic area, and producing and monitoring the research. As discussed in the 

previous section, in the recent past these tasks largely have been handled within each 

FTC bureau or office. In principle, these tasks could be accomplished either in such a 

decentralized manner or through a more systematic, centralized process involving the 

simultaneous collection of research ideas from multiple sources, coordination of topic 

choices, and then monitoring of output.436

The selection of an optimal research process likely depends on the type of work 

and output envisioned, as well as the effects on researcher incentives. Those staff 

members who do research and have good research ideas typically are the most motivated 

to aggressively pursue those ideas. Therefore, it is useful to allow staff members with 

 

435 Top managers in each organization in the FTC learn about the existence and status of policy R&D 

projects from the materials produced for semiannual management retreats and through monthly and weekly 

reports prepared by the various organizations describing those activities. 

436 Those roundtable panelists addressing the issue of appropriate sources for research ideas seemed to 

think that good ideas might come from anywhere and that there is no reason to limit the sources of such 

ideas. See, e.g., DeSanti, 7/29 DC Tr. at 128; Rubin, 7/30 DC Tr. at 176. The U.K. OFT recently used a 

Web-based moderated dialogue approach to determine areas of current policy interest among academics, 

business leaders, and others who might have useful ideas for pursuing policy R&D. The EC’s DG SANCO 

also has recently undertaken extensive surveys in its Consumer Markets Scoreboard project to identify 

areas of consumer dissatisfaction across the EU, which effort may be useful as a means of defining areas 

ripe for policy R&D. 

103
interesting and feasible research ideas to pursue such ideas.437 A process that solicits 

ideas that are then taken from the idea generator likely will produce only very general 

ideas. Such a process might be useful, however, if it is not costly and if general ideas (as 

opposed to specific research plans) are the desired output. 

Some roundtable panelists discussed the policy R&D process and suggested rather 

different approaches. Former BE Director Michael Salinger, for instance, argued that 

combining the agency’s policy groups might be sensible, but that the Bureau of 

Economics research work should remain independent of the legal policy shops and that 

the research process should remain decentralized.438 One rationale for such a view would 

be that the attorney-led organizations tend to produce top-down, workshop-intensive 

studies of a similar type, while BE tends to produce more academic products with a 

bottom-up orientation. In contrast, two former heads of legal policy shops, Susan 

DeSanti439 and Joseph Kattan,440 favored a more centralized approach under which ideas 

from a wide variety of sources would be vetted early and production would be centrally 

controlled through an agency-wide committee (which presumably would report to the 

Chairman or the Commission). The goals of such an approach would be to better control 

the chosen topics – for example, to select projects that relate more closely with current 

enforcement or advocacy priorities – and to coordinate resource deployment across 

several relatively autonomous groups. 

Two panelists independently described a staff/academic collaborative model of 

research that would pursue a systematic research agenda based largely on agencyprovided data on competition issues.441 The thrust of the argument in favor of this model 

was that the FTC could gain by inducing collaboration from academics and their graduate 

students through a data-provision scheme, in which academics gain access to the 

agency’s internal and external data for research purposes in exchange for their research 

efforts. Such collaboration might be furthered through visits from academics during 

summers and sabbaticals.442 Former BE Director Luke Froeb also discussed the 

possibility of devising a general agenda by asking three questions: (1) What do you want 

 

437 At least one panelist argued that allowing bottom-up research to occur was essential to maintaining a 

research program. See Rubin, 7/30 DC Tr. at 176-77. 

438 Salinger, 7/29 DC Tr. at 168-69. 

439 DeSanti, 7/29 DC Tr. at 128-31, 153. 

440 Kattan, 7/29 DC Tr. at 167-68. 

441 See Nevo, Chicago Tr. at 277-88; Rose, Boston Tr. at 134-36. Aviv Nevo’s general argument for 

stronger academic ties was also made by Nancy Rose, who suggested annual or biennial conferences with 

academics on topics of interest, such as retrospectives, as well as expanded use of visiting academics and 

developing ties with the National Bureau of Economic Research. 

442 The Bureau of Economics currently has some ties to the academic community through its seminar series 

and through its visiting scholars program – which brings in academics to the bureau for year-long visits – 

and occasional joint research projects. BE also has recently joined with Northwestern University’s Searle 

Center on Law, Regulation, and Economic Growth and Northwestern’s Center for the Study of Industrial 

Organization to co-sponsor an annual microeconomics conference to strengthen those academic ties. See 

supra note 322. 

104
the information for?; (2) What do you want to know? (And can we know the long-run 

effects?); and (3) What can we learn that will alter what we do?443

On their face, these suggestions present very different notions about the best 

mechanism to produce research. However, depending on which projects are included in 

the centralized scheme, these visions may not be as different as they initially appear. If 

one is searching for policy ideas to be explored in workshops or hearings, then a 

formalized topic selection process and report production scheme may be feasible. 

Obtaining ideas from a large set of sources might provide a richer choice set. Some level 

of coordination of the large externally and Commission-driven projects also might be 

appropriate. Currently, those projects are controlled by an assigned group, but higherlevel coordination almost always occurs and centralization might make that process 

proceed more smoothly. Whether such coordination needs to entail centralized control of 

production is a more difficult issue, as that may unfavorably alter incentives. As 

discussed above, individual staff members and organizations may not devote substantial 

resources to developing good projects if those projects are then taken over by other 

organizations. In addition, a centralized model would not make much sense for the 

smaller, bottom-up research projects because centralization would add little value and 

discourage development. Central planning can identify broad areas of interest, but it is 

very unlikely to produce specific achievable project ideas. The ideas for any interesting 

projects likely will have to be done on a less prescribed basis. Furthermore, the impetus 

for some of the best policy-relevant economic research is often the recognition of a new 

data source or method of analysis that could be used to shed light on questions 

surrounding a particular policy. A high degree of centralization may cause such 

opportunities to go unrecognized. 

Based on discussions with managers in various other governmental economic 

policy shops, research – particularly bottom-up economic or scientific research – seems 

to be a decentralized activity in many government organizations.444 For a segment of the 

research work, researchers tend to generate their own ideas within relevant bounds and 

pursue the topics with little oversight. Another segment of policy R&D work is directed 

or top-down research and the production of those outputs is more heavily monitored. 

Even in that context, however, the monitoring appears to be handled within a relatively 

small group, rather than coordinated across groups. 

To generate useful policy R&D topics for large projects, without imposing 

unnecessary costs on smaller, more research-oriented projects, perhaps a review process 

that differs by level of resource commitment might be the best schema. This might 

 

443 Froeb, 7/30 DC Tr. at 214-17, 269. Froeb ultimately, however, did not think a broad systematic agenda 

would be very helpful and suggested narrow efforts to examine opportunistically the outcomes of market 

events. 

444 Interviews regarding the research process and policy work at DG Comp, the Federal Reserve Board, the 

Congressional Budget Office, the Commerce Department’s Bureau of Economic Analysis, and the DOJ 

Antitrust Division’s Economic Analysis Group were conducted in June and September, 2008. Each of 

those agencies makes use of economists and each produces some policy outputs. However, the FTC 

appears to undertake more noneconomist research and policy work than do the other organizations. 

105
maintain flexibility and reduce bureaucracy at the low end, while improving monitoring 

at the upper end. Recent FTC Chairmen have used a combination of weekly and monthly 

reports and semiannual senior management retreats to review the progress of ongoing 

projects and to promote potential new ideas. 

For relatively smaller projects – such as those proposed by the economics staff 

that do not require significant data purchases and that have working papers or private 

publication in journals as the envisioned output – little review or monitoring is required. 

For instance, the Bureau of Economics currently handles such undirected research via a 

time grant process and periodic monitoring by managers in its recently established Office 

of Applied Research and Outreach.445

Occasionally, staff propose projects that may require significant time and some 

data expense, but not require compulsory process or expensive data purchases. For such 

projects, proposal preparation by the author and bureau/office review has been the norm. 

Managers within the organization have provided oversight of the project. 

Projects that require major data purchases or that grow directly from the agency’s 

agenda, projects requiring compulsory process, and congressionally requested projects 

may warrant more monitoring and control than do the smaller projects discussed 

previously. Such large project proposals could be made subject to an intra-agency review 

process, if such a process would add value or allow for better resource allocation 

decisions. The cost would be some loss of autonomy and responsibility for the individual 

group leading the project and perhaps for the individual authors, but that price may be 

offset by gains in coordination or in improved topic selection.446

d. Selected Research Ideas Identified during External 

Consultations 

Roundtable panelists provided a wide array of specific suggestions for research 

topics. The most frequently mentioned area for research was examination of outcomes 

following merger reviews – that is, merger retrospectives.447 As discussed below in 

Chapter VII, however, there was a significant divergence of opinion regarding the value 

of such work. Related to the merger retrospective work, the testing of merger simulation 

 

445 Each of the interviews with other government organizations indicated that offering at least some amount 

of this type of research time was important to meet the market for research-capable Ph.D. economists, 

especially for newly minted Ph.D.s. 

446 One approach to idea generation might entail use of a research staff person who occasionally (perhaps 

annually) collects general policy R&D ideas from across the agency and from informed outsiders, and culls 

that list down for further consideration. Those general ideas that have the most merit could then be 

forwarded to organizations within the agency for preparation of specific project proposals. The best 

proposals might then be chosen for action, with the specific shop that generated the chosen idea/proposal 

being given responsibility for production. The staffer could monitor and report on progress, but would not 

necessarily control the production process. 

447 See, e.g., Ghosal, 7/30 DC Tr. at 242-43, 273-74; Picker, Chicago Tr. at 166-69; Scheffman, NY Tr. at 

79-80. 

106
models also was proposed as a project.448 Such efforts would be aimed at determining 

whether any of the theoretical models of oligopoly behavior that drive the simulation 

results fit actual merger outcomes. Some such work has been undertaken recently by two 

FTC economists, as well as an economist at DOJ.449

Beyond merger retrospectives and simulations, several other competition topics 

were suggested. Perhaps the leading topic currently among antitrust-focused academics 

is bundled discounts, including so-called “all units” discounts.450 The London roundtable 

produced suggestions for research on two-sided markets and the implications of 

behavioral economics for competition policy,451 as well as consumer goods and services 

monopolies that produce consumer “lock-in” in the aftermarket stage.452 

Studies of the effects of resale price maintenance and single-firm market power 

also were mentioned, although not everyone was confident such work could actually be 

done in a convincing fashion.453 Retrospective work on remedies also was proposed.454

Several participants proposed studies of regulatory effects, particularly in the 

telecommunications arena. Two economists described a previous BE staff study of the 

Federal Communication Commission’s must carry rules as a model for future efforts to 

find natural experiments to test theories of exclusion.455 The idea of looking for natural 

experiments (that sometimes occur in locally regulated industries) was a theme that 

reappeared several times during the external consultations in various guises.456

Calls for generalized studies of industry also were forthcoming. Salinger lauded 

such studies as being helpful to get to essential factual issues of conduct affecting an 

 

448 See Wickelgren, Nevo, and Carlton, Chicago Tr. at 231-41. 

449 See Matthew C. Weinberg & Daniel Hosken, Using Mergers to Test a Model of Oligopoly (University 

of Georgia Department of Economics Working Paper, 2008), available at

http://www.ftc.gov/be/workshops/microeconomics/docs/mweinberg.pdf; Craig Peters, Evaluating the 

Performance of Merger Simulation: Evidence from the U.S. Airline Industry, 49 J.L. & ECON. 627 (2006). 

450 See Werden, 7/30 DC Tr. at 267-68. 

451 See Vickers, London Tr. at 78-79. 

452 See Fingleton, London Tr. at 61-62. 

453 Compare Werden, 7/30 DC Tr. at 247-50, with Carlton, Chicago Tr. at 255-57. 

454 See Heyer, 7/30 DC Tr. at 89-90; Leveque, Paris Tr. at 112; First, NY Tr. at 78. 

455 See Froeb and Hazlett, 7/30 DC Tr. at 259-60, 269-70. The panelists discussed Michael G. Vita, Must 

Carry Regulations for Cable Television Systems: An Empirical Analysis, 12 J. REG. ECON. 159 (1997). The 

natural experiment in Vita’s paper was the elimination of the must carry rules in the late 1980s on First 

Amendment grounds. This exogenous change in the regulatory regime gave cable systems discretion as to 

which (if any) local stations they would carry; it allowed clean testing of various hypotheses about the 

rationale for cable system carriage decisions. Nevo echoed Froeb’s call for opportunistic use of data to test 

the effects of various competition policy choices. Nevo, Chicago Tr. at 284. 

456 Two participants indicated that China’s new competition law may provide a fertile area for opportunistic 

examination of the effects of antitrust generally in that nation. See Shapiro and Carlton, Chicago Tr. at 

208, 212. 

107
industry.457 Sector studies were suggested, as were broad studies of issues that cut across 

sectors, such as entry.458 OFT Chief Executive John Fingleton discussed the importance 

of long-term sectoral studies as tools for relationship building, which can serve as 

effective means of both staying informed of industry conduct and providing a softer 

means of enforcement.459 Simon Pritchard of the OFT said that sectoral relationships 

built through ongoing studies are very important to achieving regulatory outcomes by 

preventing or deterring anticompetitive conduct in advance, which is a positive result 

reached at much lower costs to the agency.460 During the OFT consultation, staff 

discussed how a sector study enables the agency to obtain baseline data relevant to 

competitive conditions, which can prove useful in subsequent investigations.461 At the 

Tokyo roundtable, panelists discussed how, for the last 10 years, the JFTC has performed 

and published about 30 such sector studies, which have enabled the agency to better 

grasp the state of affairs in the marketplace.462

One panelist proposed studies that would identify the types of evidence that 

appear to be persuasive to federal judges in antitrust litigations.463 Another participant 

suggested that the FTC examine the effects of the substantial changes in U.S. antitrust 

policy over the past 20 years.464

On the consumer protection side, roundtable panelists mentioned advertising and 

the regulated professions as useful areas for re-examination. Regarding advertising, 

suggested areas for study included an examination of how well disclosures in advertising 

really work – that is, are they seen, read, and comprehended, and how might one evaluate 

the meaning and message of ads without text?465 In addition, one participant noted the 

proliferation of anti-aging claims of various sorts aimed at the aging Baby Boomer 

generation, suggesting that those areas might provide fertile ground for studies.466

 

457 Salinger, 7/29 DC Tr. at 139-40. 

458 See Leveque, Paris Tr. at 112; Krattenmaker, 7/30 DC Tr. at 94-95; Calkins, 7/30 DC Tr. at 116-17; 

Consultation with DG Comp, Oct. 21, 2008. 

459 Fingleton, London Tr. at 55-56. 

460 Pritchard, London Tr. at 99. 

461 Consultation with OFT, Sept. 11, 2008. OFT staff explained that by gathering the baseline data through 

a market study, the agency may obtain more information relative to the limited set of data that is obtainable 

through a particular investigation. Id. 

462 Tokyo Roundtable, Oct. 7, 2008. 

463 See Swire, NY Tr. at 86. 

464 See Rose, Boston Tr. at 94. 

465 See Greenbaum, NY Tr. at 194-96 (addressing disclosures); Swire, NY Tr. at 198-99 (addressing ads 

without text). 

466 See Levine, NY Tr. at 197. 

108
Similar to the calls for more advocacy-related research, examination of the effects 

of regulations by non-market-oriented regulatory agencies also was proposed.467 In 

addition, critically examining the implications of behavioral economics in market settings 

was discussed.468 Study of online behavioral advertising also was proposed as a useful 

addition to the FTC research agenda.469 

* * * 

Agency leadership must motivate the staff to pursue the agency’s mission, both 

by clearly communicating that mission to staff and by listening to staff’s input on how 

best to achieve the mission. Strategic planning allows the agency to identify competition 

and consumer protection problems on the horizon, as well as determine which tool or 

tools with which to address such problems. Policy R&D is a necessary foundation for 

tackling the challenging competition and consumer protection policy issues that the 

agency has been tasked with addressing. The FTC’s efforts in these three areas – 

leadership, planning, and research – significantly impact the agency’s ability to deploy its 

resources in an effective manner. The following chapter addresses how the agency 

currently deploys its resources, as well as how it might improve on such deployment in 

the future. 

 

 

467 MacLeod (7/30 DC Tr. at 177-80) and Calfee and Rubin (7/30 DC Tr. at 171-76) argued that the best 

FTC research historically was that focused on policies of other regulatory agencies (for example, those 

involving restrictions in the areas of advertising, optometry, and legal services). Supporting that view, a 

panelist at the Paris roundtable noted that the FTC study on the effects of advertising on the practice of 

optometry is over 20 years old but remains the best in its class. Philips, Paris Tr. at 131-32. 

468 See Rubin, 7/30 DC Tr. at 171-72, 187-89; Peeler, 7/30 DC Tr. at 183; Calfee, 7/30 DC Tr. at 184-87. 

In addition, Peter Swire suggested that the FTC more thoroughly examine the connections between 

behavioral economics and experimental economics and their implications for online commerce. Swire, NY 

Tr. at 198-99; Written Submission of Peter P. Swire, Oct. 29, 2008, at 6-7. 

469 See Swire, NY Tr. at 198-99. 

109
VI. Deployment of Agency Resources 

This chapter discusses the FTC’s deployment of resources in pursuit of its 

competition and consumer protection missions, identifying considerations that might 

guide such deployment. Section A addresses general issues involving the allocation of 

resources across the agency’s many functions. Section B reviews the FTC’s resource 

deployment options, illustrating the many tools – such as enforcement, advocacy, 

research, and education – available to the agency. 

A. General Issues Involving Resource Allocation 

An agency’s allocation of its scarce resources undoubtedly is one of the most 

significant determinants of its ultimate success. Once it identifies a desired outcome – 

for example, a reduction in the number of deceptive weight-loss claims – a successful 

agency will make optimal use of its tools to achieve that outcome 

Resource allocation, then, is to a large extent a matter of picking the right tool or 

tools from the FTC’s existing arsenal – or adding new tools to that arsenal – to best 

address the matter at hand. At the Chicago roundtable, then-BE Director Michael Baye 

framed the analysis in terms of being at the right point of “a production possibilities 

curve that doesn’t have guns and butter on it but has all the different outputs that the 

Federal Trade Commission can produce.”470 A roundtable panelist suggested that, 

assuming the FTC seeks to deploy its resources in such a manner as to maximize 

consumer welfare, the agency should engage in efforts that produce “the biggest gain to 

marginal consumer welfare.”471

Resource allocation decisions also should consider the potential costs, to the 

public as well as the agency, of pursuing particular activities. A senior OFT official 

observed that an agency’s tools vary in terms of the risk and cost associated with each of 

them. The OFT, he continued, is able to achieve certain outcomes at a lower cost by 

employing “softer enforcement,” such as building relationships with key stakeholders and 

other advocacy efforts, rather than “swinging heavy tools around at high costs.”472 

Another panelist cautioned that, when deciding where to devote resources, an agency 

should consider more carefully the cost of making a wrong decision in bringing a case or 

taking some other action.473

 

470 Baye, Chicago Tr. at 268. 

471 Elhauge, Boston Tr. at 25. Another roundtable panelist maintained that the resource allocation issue 

should be framed more broadly, explaining that “the question should not be how the FTC can allocate its 

resources, it should be how the United States should allocate its resources. You’re sub-optimizing if you 

simply look at what the FTC can do to make the best of the resources it has.” Angland, NY Tr. at 26. 

472 Pritchard, London Tr. at 97-98. 

473 See Heyer, 7/30 DC Tr. at 110 (“If you had reason to believe that with some reasonable probability, 

maybe only 30 percent, permitting [a] merger could lead to wonderful things for the economy, in a 

circumstance like that, you might want to think twice before bringing the case.”). 

110
 Tool selection, much like strategic planning, should include a certain amount of 

flexibility.474 It may be the case, for example, that business education and policy R&D 

efforts such as workshops are the best tools to address a relatively new and complicated 

issue in the marketplace. However, if there is an insufficient response on the part of 

industry to such efforts, it may be that enforcement actions are necessary to more 

effectively accomplish the agency’s objectives on such issue. 

In addition to general praise for the FTC’s allocation of its resources,475

roundtable panelists had specific suggestions for such allocation. Most significantly, a 

fairly broad consensus formed around the idea that, although law enforcement is a 

primary function of the FTC, the Commission needs to remain more than just an 

enforcement agency. As former Chairman Timothy Muris explained, on the antitrust 

side, to be recognized as really doing your job, it is necessary, but not sufficient, to bring 

cases.476 According to former BC Director Susan Creighton, the mission on both sides of 

the agency is to preserve the effectiveness of markets. The overall priority of the agency 

thus is to determine where there are instances of market failure and to address those. 

Sometimes the best tool to do that will be enforcement; sometimes, however, 

enforcement is not the right tool.477 Former BC Director Richard Parker noted that in 

pursuing a particular policy, the agency cannot rely solely on law enforcement because 

the right cases may not present themselves; it may be that other tools, such as guidelines, 

for example, will need to be used to pursue the desired policy.478 

Panelists also offered various suggestions as to how the agency should make 

resource allocation decisions. One panelist cautioned against focusing on a particular 

area or issue merely because it is novel. According to the panelist, the FTC has focused 

 

474 See, e.g., Pritchard, London Tr. at 105 (“We don’t hesitate to switch tools[;] . . . if we find that actually 

there is a nut that does not crack with some hammer then we are not wedded to sticking to the original 

tool.”). 

475 See, e.g., Heyer, 7/30 DC Tr. at 98 (“I think that whatever their resources happen to be, they’re 

allocating them reasonably nicely.”) (complimenting specifically the agency’s efforts in the competition 

advocacy and international arenas); Krattenmaker, 7/30 DC Tr. at 114-15 (“I think that the things you 

choose to do are generally very well selected. I think the way you allocate your resources is well done.”); 

Wilks, London Tr. at 37-38 (characterizing the agency’s nonlitigation efforts – including, for example, 

competition advocacy, consumer education, and competition R&D – as having been “extraordinarily 

productive and successful in building legitimacy and consen[sus]”). 

476 Muris, 7/29 DC Tr. at 54. See also Robert Pitofsky, Past, Present, and Future of Antitrust Enforcement 

at the Federal Trade Commission, 72 U. CHI. L. REV. 209, 213-14 (2005) (“Another important change in 

the Commission’s approach to regulation, contributing to its enhanced status, involves the recognition that 

the FTC was not created solely as a law enforcement agency. Rather, it was established in 1914 to work 

with the private sector, provide advice about possible violations, anticipate and study economic trends and 

developments, and anticipate and report to the White House, Congress, and the public likely economic 

problems.”). 

477 Creighton, 7/29 DC Tr. at 75-76. 

478 Parker, 7/29 DC Tr. at 118. See also T. Schwartz, Chicago Tr. at 48 (arguing that, although law 

enforcement plays an “important part” in the agency’s mission, it should include more than just 

enforcement); Bernstein, 7/29 DC Tr. at 53 (suggesting that the agency ought to be “beating a drum at the 

ABA and elsewhere” about the agency’s accomplishments outside the litigation context). 

111
resources on “new and burgeoning” areas, and there are benefits to that course, including 

“sending a message of deterrence right at the outset where you see the potential for 

fraud.” He cautioned, however, that the agency should not address an area simply 

because it is new; it must be important as well.479 Another panelist suggested that the 

agency’s resources might be focused “more on what the FTC can do distinctively because 

that may be where the biggest marginal gains are.”480 In other words, asked the panelist, 

what can the FTC do that neither the DOJ nor private antitrust actions can do?481 

Similarly, another panelist asserted: “In an era of limited resources, the focus of the 

agency should be where two criteria are met: (1) a topic has important effects on 

consumers; and (2) the FTC has a significant advantage in effectiveness compared with 

other possible ways to address the topic[, including, for instance,] state enforcement, 

enforcement by agencies in other countries, self-regulation, or reliance on market 

forces.”482

Finally, former General Counsel Stephen Calkins complimented the simultaneous 

use of agency tools within a specific area. Citing the example of recent FTC (and DOJ) 

actions in the real estate brokerage industry, Calkins argued that “that actually is an 

example of the whole process working well because the agencies are litigating and doing 

advocacy and doing [policy] R&D and using a whole panoply of their resources, which I 

tend to think is when things work best. . . . My guess is that that linking together is what 

really works.”483

B. The FTC’s Many Resource Deployment Options 

1. Law Enforcement/Litigation 

The FTC’s law enforcement authority encompasses both consumer protection and 

antitrust. The basic consumer protection statute enforced by the Commission is Section 

5(a) of the FTC Act, which declares unlawful “unfair or deceptive acts or practices in or 

affecting commerce.”484 Drawing on a 1980 Commission policy statement, Congress in 

1994 defined “unfair” practices as those that “cause[] or [are] likely to cause substantial 

injury to consumers which is not reasonably avoidable by consumers themselves and not 

 

479 Brauch, Chicago Tr. at 59-60. 

480 Elhauge, Boston Tr. at 25. 

481 Id.

482 Written Submission of Peter P. Swire, Oct. 29, 2008, at 3. See also Swire, NY Tr. at 161-63 

(recommending that the agency “go after important issues and especially focus on things that other 

[enforcement agencies] aren’t going to do very well” and identifying forensics and new technologies as 

areas in which the FTC likely has a comparative advantage over local enforcers). 

483 Calkins, 7/30 DC Tr. at 74. See also Boast, NY Tr. at 31-32 (“[T]here are . . . wonderfully unique things 

about the FTC and the history of the statute and the agency that allow it to deploy multiple sets of tools to 

the advantage of consumers.”). 

484 15 U.S.C. § 45(a)(1). The basic prohibition (though initially limited to acts or practices “in commerce”) 

was added to the FTC Act in 1938; previously, the Commission had challenged what would now be called 

“consumer protection” violations as unfair methods of competition. 

112
outweighed by countervailing benefits to consumers or to competition.”485 In addition, 

the Commission enforces a variety of specific consumer protection statutes – for 

example, the Equal Credit Opportunity Act, Truth-in-Lending Act, Fair Credit Reporting 

Act, the Cigarette Labeling Act, the Do-Not-Call Implementation Act of 2003, the 

Children’s Online Privacy Protection Act, the Fair and Accurate Credit Transactions Act 

of 2003, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 

2003 and others486 – that prohibit specifically defined trade practices and generally 

specify that violations are to be treated as if they were “unfair or deceptive” acts or 

practices under Section 5(a). The Commission enforces the substantive requirements of 

consumer protection law through both administrative and judicial processes. 

The Commission enforces various antitrust laws, most significantly Section 5(a) 

of the FTC Act and provisions of the Clayton Act, through its Bureau of Competition. 

Section 5(a) of the FTC Act prohibits “unfair methods of competition.”487 Unfair 

methods of competition include any conduct that would violate the Sherman Antitrust 

Act. The Clayton Act prohibits, among other things, corporate acquisitions that may tend 

substantially to lessen competition488 and certain forms of price discrimination.489 As 

with its consumer protection responsibilities, the Commission uses both administrative 

and judicial processes to enforce antitrust law.490

Enforcement Goals. In allocating resources to its law enforcement efforts, the 

agency should first consider the goals that underlie such efforts. As discussed in more 

detail in Chapter VII.B below, among the most important goals of the FTC’s law 

enforcement mission are providing guidance to industry, developing sound law, and 

obtaining consumer redress. Deterrence of unlawful conduct, however, is the lodestar of 

the agency’s law enforcement efforts. Former BCP Assistant Director Paul Luehr 

expressed the view that the FTC’s role as an enforcer – particularly since the early 1990s 

– “has really given the agency added heft. No longer [is it] considered just the nanny on 

Pennsylvania Avenue full of regulations, rules related to the frosted cocktail glass, and 

things like this. But now [it is seen as bringing] real cases in federal court against real 

wrong doers and I think that has had a real deterrent effect and many other salutary 

effects on the market.”491 According to former BCP Deputy Director Lee Peeler, an 

 

485 Id. § 45(n); FTC Policy Statement on Unfairness, Appended to International Harvester Co., 104 F.T.C. 

949, 1070 (1984). 

486 Links to various statutes enforced by the Commission are available at www.ftc.gov/ogc/stats.shtm. 

Some of these statutes include provisions for enforcement by other agencies; for example, the 

Administrator of the National Credit Union Administration can enforce the Fair Credit Reporting Act 

against credit unions.

487 15 U.S.C. § 45(a). 

488 Id. § 18. 

489 Id. §§ 13-13b. 

490 Additional information regarding the FTC’s enforcement authority is available at 

http://www.ftc.gov/ogc/brfovrvw.shtm. 

491 Luehr, Chicago Tr. at 25-26. See also id. at 46-47 (“So in terms of allocation of resources, I don’t think 

that too much can be said about the effect of real federal cases.”). 

113
active enforcement program provides the agency with credibility – “street cred” – when it 

goes to another government agency, a state, or a consumer group and advocates a certain 

approach to consumer protection.492 Another roundtable panelist explained that “the 

notion of demonstrating to the bar and the business community that the cop is really on 

the beat is a really important part of the agency’s enforcement mission.”493

Caseload. An important consideration in allocating resources to law enforcement 

efforts is the appropriate number of cases to pursue at any given time. As former 

Chairman Muris has written, an agency that takes on commitments that significantly 

outrun its capabilities does so at its own peril: 

Agencies can create a serious problem by taking on so 

many matters that the agency lacks the human capital to 

execute them well. Again the overambitious case load in 

the 1970s overtaxed the agenc[y’s] capabilities, thereby 

raising doubts about the FTC’s ability to handle the matters 

successfully. The Commission would have been far better 

off choosing a smaller number of matters and handling 

them well.494 

 Resource allocation and caseload are also considerations when requests for 

cooperation are received from foreign counterparts. Although it has not been a problem 

to date, as more and more FTC investigations and cases – for both missions – involve 

foreign elements, the agency as a whole may need to consider the resource implications 

of cooperation with foreign counterparts in investigations and litigation. In a number of 

instances, the investment of FTC resources on behalf of a foreign government may 

encourage foreign agencies to invest their resources to support FTC enforcement matters. 

This ingredient of reciprocity warrants attention in deciding how to allocate FTC 

resources. 

Case Generation. Another consideration in evaluating the agency’s law 

enforcement efforts is the amount and type of case generation in which the agency 

 

492 Peeler, 7/30 DC Tr. at 141-42. 

493 McDavid, 7/30 DC Tr. at 53 (“Most antitrust enforcement in this country, and I think around the world, 

actually doesn’t happen [at an antitrust agency] like this. It happens in my clients’ boardrooms, in the 

conference rooms in our law firms, where we tell the clients the risks that attach to the conduct that they are 

proposing . . . . And our ability to get the attention of the business people and have them take us seriously 

when we tell them, you are close to the line or you are over the line, is directly correlated to the things that 

do happen [at the agency] and in your enforcement mission.”). See also Written Submission of Tim 

Kennish, Sept. 26, 2008, at 6 (“[G]uidance will not, it seems to me, engender the respect it deserves if it is 

not supported by enforcement actions in cases where the behavior in question constitutes a clear violation 

of FTC enforcement policy. In essence, the agency cannot afford to shrink from putting its money where 

its mouth is.”); Baer, 7/29 DC Tr. at 85 (“To get companies and individuals to take seriously the impact of 

[the agency’s] prospective guidance, there has to be a cop on the beat and there has to be an ability to 

enforce and to go aggressively where somebody has overstepped the line. You really need both [guidance 

and enforcement].”). 

494 Muris, Principles, supra note 17, at 181-82. 

114
engages. Former BC Director Richard Parker recommended that the agency be 

innovative in the area of case generation, citing trade press – particularly in fungible 

commodity industries with few sellers – and trade association bylaws as sources of 

potential cases.495 Former BCP Assistant Director Darren Bowie argued that an approach 

of generating cases and seeing which ones percolate to the top is not effective. Instead, 

the agency fares better when everyone – including the Commission, managers, and staff – 

understand what the enforcement strategy is and why the agency is bringing the cases that 

it is bringing.496

Case Selection. Perhaps the most important consideration in evaluating the 

enforcement efforts of the FTC is its case selection. Such evaluation should consider 

where the agency decides to focus its enforcement efforts. For example, should that 

focus be where potential consumer benefits and/or redress are largest? Should the focus 

be on areas involving the greatest amount of commerce? How much of the agency’s 

enforcement efforts should be devoted to developing or clarifying competition and 

consumer protection doctrine? Does the agency have the right mix of high risk/high 

reward or cutting-edge cases, on the one hand, and low risk/low reward or traditional 

cases, on the other? Is the agency properly calibrating its litigation risk? How should the 

agency incorporate investigative and case cooperation commitments to foreign 

counterparts consistent with resource constraints? 

External consultations confirmed the importance of focusing enforcement efforts 

on significant portions of the national economy, including health care, energy, and retail 

markets. In deploying enforcement resources, according to former BC Director William 

Baer, it would be reckless not to take a hard look at what is important in the economy 

generally, such as health care, information technology, and Internet commerce. He 

cautioned, however, that such a focus will not necessarily result in most of the agency’s 

cases being brought in those areas; rather, the agency has to go “where the money and the 

problems are.”497 Another panelist agreed that the agency ought to focus on significant 

sectors of the economy; however, he added that the agency needs to “use a number of 

different tests and see whether the result of applying more than one leads [it] to the same 

conclusion.”498

Former BC Director Susan Creighton has remarked that the agency should “fish 

where the fish are.”499 Specifically, she cited two instances of market failure in which 

enforcement can be the right tool. The first instance involves legal failure – that is, areas, 

such as the state action and Noerr-Pennington doctrines, in which the development of 

 

495 See Parker, 7/29 DC Tr. at 74-75. 

496 See Bowie, 7/29 DC Tr. at 71-72. 

497 Baer, 7/29 DC Tr. at 73. 

498 Temple Lang, Brussels Tr. at 70. 

499 Muris, 7/29 DC Tr. at 42 (citing Creighton); see also Susan A. Creighton et al., Cheap Exclusion, 72 

ANTITRUST L.J. 975, 978 (2005) (“[W]hen fishing, the best place to fish is where the fish are plentiful, and 

the things you catch are likely to be fish.”). 

115
antitrust law appears to be going in the wrong direction. The second instance is where 

there are no other proper plaintiffs whose interests coincide with the public interest, 

perhaps due to a collective-action problem.500 

According to roundtable panelists, the agency also should consider focusing its 

law enforcement efforts in such a manner as to both leverage its resources and exploit its 

comparative advantages. Baer recommended that the agency select areas in which the 

agency can leverage its resources by, for example, serving as a model for local and state 

officials to emulate, with the end result being “more cops on the beat than just the 

FTC.”501 Luehr suggested that the number of consumers injured – not just the amount of 

potential redress – should be taken into consideration because few entities other than the 

FTC can take on high-volume consumer cases.502 Similarly, another panelist observed 

that, unlike in Europe, the U.S. has a “parallel system” of private enforcement that may 

provide the FTC with the opportunity to forego certain cases that may be better suited for 

such private enforcement.503

In addition to the more traditional leads for investigations (such as complaints or 

merger notifications), some foreign counterparts such as the U.K. OFT increasingly are 

adopting a more intelligence-led, proactive approach to case selection. The OFT has 

committed significant resources to idea generation, establishing a horizon scanning team 

to coordinate generation of new project ideas within the office, as well as a monthly 

project ideas group that brings together individuals from across the office responsible for 

researching and developing ideas for new work. All OFT investigations, independently 

of their source, are prioritized according to their likely impact and strategic significance, 

balanced against the risks and resources needed.504 This prioritization framework is 

applied at group and area management levels with escalation to the senior management 

team when necessary.505

 

500 Creighton, 7/29 DC Tr. at 76-78. 

501 Baer, 7/29 DC Tr. at 74. 

502 Luehr, Chicago Tr. at 92-93. 

503 Venit, Brussels Tr. at 14. See also Heimler, Paris Tr. at 135 (stating that the United States is in a 

“privileged situation” because most cases “originate from private litigation, and I think this makes a very 

big difference, also, in terms of priority for the agency, in terms of cases that you take”). 

504 See supra Chapter V.B.3 for a discussion of these prioritization principles. 

505 Consultation with OFT, Sept. 11, 2008. Other countries prioritize by subject matter areas (e.g., 

consumer credit, tourism and leisure, public service delivery), while others select cases based on particular 

industries or commercial sectors (e.g., mobile commerce). Still others adopt a hybrid approach, focusing 

first on subject matter and then weighing various factors such as the cost of enforcement action. For 

example, the Canadian Competition Bureau has developed a two-step formal approach to case selection: 

the first step involves identifying particular sectors worthy of the Bureau’s attention; the second step 

involves a triage approach to identify factors that would suggest that a specific case should be opened. 

Factors considered include: (1) specific deterrence (i.e. to stop a repeat wrongdoer); (2) the need for 

judicial interpretation of a specific legal principle; (3) prevention or correction of conduct; (4) general 

deterrence; (5) awareness/promotion of compliance; (6) addressing particularly flagrant or egregious 

conduct; and (7) meeting the Bureau’s obligations to law enforcement partners. Consultation with 

Canadian Competition Bureau, Sept. 17, 2008. 

116
Another relevant factor in selecting cases is the litigation risk attendant to 

pursuing any given case. In the various external consultations, there was a fairly uniform 

view that the agency ought to be less risk-averse in bringing cases. Parker bluntly stated 

that “if you weigh the risk of losing too much, you are never going to bring a case.”506 

Former BC Assistant Director Joseph Kattan remarked that “the function of the agency as 

an enforcement agency is to get the right answer. It is not to win cases for the sake of 

winning cases.”507 Another panelist argued that, although the agency has to win “a 

reasonable proportion” of the cases that it brings, “you also have to recognize that at least 

from time to time you’re going to have to bring cases to try to establish the law where 

either it seems to be wrong or it isn’t sufficiently clear or you want to push the 

boundaries, to some extent, and . . . you can’t guarantee [that you will] win cases of that 

kind.”508 A panelist at the Tokyo roundtable argued that the FTC would make the most 

of its human resources – particularly its economists – by pursuing difficult cases and not 

being overly concerned about winning or losing a particular case.509 Bruno Lasserre, the 

head of the Conseil de la Concurrence, noted that a well-reasoned opinion dismissing a 

complaint can be as valuable in developing legal standards as an opinion that finds 

liability.510

Similarly, Bowie explained: “The Commission’s reputation is strong enough that 

it can afford to take some risks in the right cases where there is a clearly defined 

consumer harm that the agency can articulate and that outsiders and insiders can 

understand. In those cases, it is worth taking some risks and the Commission can afford 

to do more of that.”511 Former BE Director David Scheffman characterized the agency 

staff as “very conservative” in bringing cases, identifying as one of the causes the fact 

that litigation losses tend to be felt primarily by career staff, who continue to be at the 

agency when adverse decisions are rendered, rather than senior staff and the 

Commissioners, who may have departed the agency by such time.512

 

506 Parker, 7/29 DC Tr. at 80. 

507 Kattan, 7/29 DC Tr. at 158. See also Campbell, Chicago Tr. at 119 (“I’m not saying [the FTC has] to 

litigate every case. I just think the FTC’s tradition is not to litigate enough cases and not to go to court 

often enough.”); Heyer, 7/30 DC Tr. at 97 (“I think that you don’t want to be in a position where every case 

you bring you win. That suggests maybe you’re not bringing enough. And I like the idea of pushing a bit 

and being in court more often. . . . I began by saying I think the agency should try to be in court more. It 

does have benefits, transparency, fashioning the doctrine. War is inefficient, but sometimes you do go to 

war.”); Boast, NY Tr. at 52-53 (“I wouldn’t be troubled by a twenty percent win ratio. . . . The losses are 

very important. If you’re bringing frivolous cases, of course not. But, . . . [it is] very important to know 

what the courts think about [the difficult cases].”); Angland, NY Tr. at 65 (“having a low winning 

percentage doesn’t mean you shouldn’t be bringing cases”). 

508 Temple Lang, Brussels Tr. at 39. 

509 Tokyo Roundtable, Oct. 7, 2008. 

510 Consultation with Conseil de la Concurrence, Oct. 23, 2008. 

511 Bowie, 7/29 DC Tr. at 81. 

512 Scheffman, NY Tr. at 51, 53. 

117
Fora. The FTC is able to pursue its law enforcement mission through both 

administrative processes (in so-called Part III proceedings) and judicial processes (in 

federal district court). The agency must make a determination as to the proper forum for 

the various enforcement actions that it pursues, and primary considerations may be that 

the Commission’s authority to obtain redress, disgorgement, and other equitable remedies 

is well established only in a judicial setting, while the agency has more opportunity to 

apply its expertise in an administrative setting. 

Remedies. Another significant factor in making law enforcement decisions is the 

appropriate remedy that the FTC should seek in any given case; as noted above, this may 

be key to selecting a judicial or administrative forum. 

A relevant consideration is whether the agency is using its remedial powers – 

including conduct, structural, and monetary remedies – properly and effectively. Several 

panelists commended the FTC’s 1999 merger remedies study513 for helping to refine the 

agency’s pursuit of appropriate remedies.514 Panelists also addressed the FTC’s authority 

to pursue disgorgement as a remedy for antitrust violations of the FTC Act. One panelist 

touted the benefits of disgorgement, arguing that injunctive remedies, such as cease and 

desist orders, and even structural remedies, often are inefficient and ineffective; by 

comparison, disgorgement can take away the benefits of the unlawful conduct from its 

perpetrator, thereby providing much greater deterrence of those violations in a more 

efficient manner.515 Others, including former Commissioner Thomas Leary, argued 

against the imposition of such “retrospective consequences in the antitrust field.”516

Whatever the remedy sought in any particular matter, such remedy should be 

identified as early as possible in the course of the matter. If no workable remedy is 

possible, the agency might reconsider pursuing such matter. As one panelist framed the 

issue, “[It is] very important, before ever taking an individual case on, . . . to ask yourself 

a question[:] if I had to put a remedy in place, what would it be and will it make things 

better or worse? . . . [T]hat is a very important discipline to take on before one gets 

involved in an individual case.”517 

A larger consideration for the agency is whether its existing remedial powers are 

appropriate, given its competition and consumer missions. As one example, the FTC has 

very limited authority to pursue civil penalties for violations of Section 5 of the FTC Act. 

The Commission has testified before Congress that there are categories of cases in which 

“restitution or disgorgement may not be appropriate or sufficient remedies” and thus 

 

513 1999 DIVESTITURE STUDY, supra note 408. 

514 See, e.g., McDavid, 7/30 DC Tr. at 87; Heyer, 7/30 DC Tr. at 89. 

515 See Elhauge, Boston Tr. at 61-63. 

516 Leary, 7/29 DC Tr. at 24. 

517 Venit, Brussels Tr. at 14-15. See also Koponen, Brussels Tr. at 22 (“[O]n the Section 2 side of things, I 

think we’ve seen, not least here in Europe, some big question marks around remedies that have been 

imposed or have been considered in those types of cases.”). 

118
“civil penalties could enable the Commission to better achieve the law enforcement goal 

of deterrence.”518 

Settlements and Closing Statements. The vast majority of cases pursued by the 

agency – much like those pursued by private parties – are settled prior to or during 

litigation. In addition, the agency recently has issued statements in connection with the 

closing of certain matters, generally discussing the reasons for not pursuing such matters. 

Consent decrees and closing statements are thus examined by industry and the bar for 

guidance as to the agency’s enforcement stance in a given area of competition or 

consumer protection law. Relevant considerations in this area include whether the 

agency is making proper use of consent orders and closing statements and, more 

specifically, whether the agency can provide more information and reasoning in such 

documents than it currently does. 

Kattan explained that the public analyzes consent orders because “this is how the 

Commission broadcasts to the world what its enforcement priorities are. So long before 

there was a Rambus case, there was a Dell case[,] . . . which was a consent order, [in] 

which the Commission laid out a policy regarding patent ambush.”519 Luehr claimed that 

FTC staff does not realize the extent to which companies look at final orders – bullet-bybullet – to determine what they need to do to ensure that they are in compliance with the 

consumer protection laws.520 Another roundtable panelist, however, questioned the value 

of FTC consent decrees – particularly in the merger context – characterizing them as 

“articles of surrender” signed by CEOs wanting to get their mergers approved and stuffed 

full of “exotic theories” held by the Commission.521

Roundtable panelists consistently favored the concept of issuing closing 

statements, describing them as “very useful,”522 “excellent,”523 and “one of the great 

innovations of the last five or six years.”524 One panelist extolled the “transparency that 

comes from things like some of the very informative closing statements that the Federal 

Trade Commission pioneered a while back.” He specifically cited the statement issued in 

 

518 Federal Trade Commission Reauthorization: Hearing on the Federal Trade Commission 

Reauthorization Act of 2008 Before the S. Comm. on Commerce, Science, and Transp., 110th Cong. 10-11 

(2008) (statement of the Federal Trade Commission), available at

http://www.ftc.gov/os/testimony/P034101reauth.pdf. 

519 Kattan, 7/29 DC Tr. at 125 (citing Rambus Inc., FTC Dkt. No. 9302; Dell Computer Corp., FTC Dkt. 

No. C-3658). See also Harrop, Chicago Tr. at 126 (describing settlements as a “very useful” way for an 

agency to tell the public what its priorities are and where it thinks there are consumer harms); Bowie, 7/29 

DC Tr. at 86 (“[C]ases in litigation also play a hugely important role in providing guidance to the industry, 

particularly when the vast majority of Commission actions are settlements.”).

520 Luehr, Chicago Tr. at 45-46. 

521 Campbell, Chicago Tr. at 108-09. See also id. at 117 (questioning deterrence value of consent decrees). 

522 DeSanti, 7/29 DC Tr. at 147. 

523 Pritchard, London Tr. at 41. 

524 Kattan, 7/29 DC Tr. at 144. 

119
connection with the closing of the Cruise Line matter,525 saying that it was “very good 

because it not only informed people, . . . but it also allowed people to debate things 

publicly, and that is something that helps lead you towards a better answer.”526 

Similarly, former BC Scholar in Residence Joshua Wright observed that an agency may 

be more careful in its analysis of a particular matter if it anticipates issuing a closing 

statement in such matter.527 Another panelist made the point that closing statements are 

particularly important in highly visible matters, observing that “part of deterrence [is] to 

be out there showing how [the agencies are] thinking about cases that are visible and 

important[,] . . . [b]ut if you’re not bringing the visible case, maybe you should expla

528

in 

hy not.” 

r for 

plaining 

s 

tates, 

 particular, warned him of potential litigation over such closing statements.530 

2. Policy Research and Development 

ities 

rings, studies, reports, and ex post assessments of agency 

itiatives and actions. 

 

w

There are, of course, various concerns raised by the practice of issuing closing 

statements and agency transparency more generally. Former BC Project Directo

Intellectual Property Hillary Greene identified the following concerns: resource 

constraints, confidentiality, undermining agency discretion in future cases, and ex

decisions that are based on administrative considerations or that involve “mixed 

motives.”529 A former Canadian competition official explained how he encountered 

significant resistance to his decision “to not only explain on the public record those case

where we were challenging but, in high profile matters, reasons why we decided in the 

end not to challenge the matter.” As he explained, his counterparts in the United S

in

As discussed in more detail above in Chapter V.C, policy research and 

development at the FTC includes a broad array of activities designed to inform the 

agency’s pursuit of its competition and consumer protection missions. These activ

include workshops, hea

in

525 The FTC press release announcing the closing of the Cruise Line matter, with links to statements by the 

Commission majority and the dissenting Commissioners, is available at 

www.ftc.gov/opa/2002/10/cruiselines.htm. 

526 Heyer, 7/30 DC Tr. at 65. But see, e.g., Levine, NY Tr. at 174-75 (recommending that the FTC include 

additional information and reasoning in its closing statements); Pritchard, London Tr. at 41-44 (same); 

Bloom, London Tr. at 168 (same). 

527 See Wright, Chicago Tr. at 130. 

528 Shapiro, Chicago Tr. at 264. See also AAI TRANSITION REPORT, supra note 150, at 187 (“The agencies 

should issue statements at the close of every prolonged or high-visibility merger investigation that results in 

no agency challenge. . . . These statements should be more than perfunctory, describing not only issues 

involving definition of markets but also additional information, such as entry and efficiencies, whether 

favorable or unfavorable to the agency’s decision, that was considered in determining whether or not to 

challenge the transaction.”). 

529 Greene, Boston Tr. at 77-76. 

530 Goldman, Ottawa Tr. at 10-11. 

120
Consultations with various outside parties and representatives from other 

competition and consumer protection agencies identified significant support for the 

FTC’s allocation of resources to its policy R&D efforts. Former Chairman Muris 

characterized such efforts as “part and parcel of the [agency’s] mission.”531 Former 

Commissioner Leary described the policy R&D program as more than just a “support 

service of the Bureaus,” stating that he would make the program part of the agency’s core 

mission.532 Former OPP Deputy Director Jerry Ellig, who is involved in government 

agency review efforts at the George Mason University Mercatus Center, offered that he 

tells other government agencies that they can learn from what the FTC does in the policy 

R&D area. He described such R&D as “a crucial input into the [FTC’s] good decisionmaking.”533 Another roundtable panelist opined: “The FTC’s special mission in the 

policy area, I think, has been extraordinarily valuable.”534

In addition, the ABA Transition Report recently made the following 

recommendation: “The U.S. agencies should devote substantial resources to providing 

intellectual leadership and increasing transparency through policy research and 

development. . . . Although they can be resource-intensive, ‘policy research and 

development’ efforts such as empirical studies, hearings, reports, and literature surveys 

can play a vital role in the development of [antitrust] standards that strike the proper 

balance between under- and over-deterrence.”535

3. Advocacy 

As an important complement to its law enforcement mission (and as a component 

of its relations with other domestic agencies, as discussed in Chapter IV.C), the FTC 

engages in competition and consumer protection advocacy before other policymakers, 

including state legislatures, regulatory boards, and officials; state and federal courts; 

other federal agencies; and professional organizations, such as bar associations. In 

response to requests or where public comments are sought, the FTC issues advocacy 

letters, comments, and amicus briefs, providing policymakers with a framework to 

analyze competition and consumer protection issues raised by pending governmental 

actions or ongoing judicial disputes. Advocacy can play a particularly important role in 

addressing governmentally imposed restraints on competition, where (unless a state body 

acts outside the proper confines of the state action doctrine), other tools may be 

unavailable.536

 

531 Muris, 7/29 DC Tr. at 54. 

532 Leary, 7/29 DC Tr. at 27. 

533 Ellig, 7/30 DC Tr. at 42-44. 

534 McDavid, 7/30 DC Tr. at 54. 

535 ABA TRANSITION REPORT, supra note 11, at 46. 

536 See Conversation with Muris and Pitofsky, supra note 27, at 830-31 (observations by Muris about the 

essential need to address, by advocacy and other means, governmentally imposed restraints on 

competition). 

121
External consultations confirmed the important informational purpose served by 

the agency’s advocacy efforts. Panelist Ken Heyer explained that “one of the reasons 

why regulations and laws that are harmful or anticompetitive in some way manage to 

flourish . . . is because the costs associated with them are not obvious to people who don’t 

spend their lives studying them.”537 Competition advocacy, Heyer continued, helps “to 

illustrate the costs associated with certain types of policies. And, at that point, you have 

to leave things up to democracy to decide. But at least you’re clarifying and highlighting 

what the costs of certain [policies] are.”538 Similarly, another panelist stated that 

advocacy letters to state legislatures are “quite useful” because often the only source of 

information regarding a particular bill is the advocates of such bill, including the 

industries that stand to benefit from the bill’s passage.539 

There was strong support among those consulted for the FTC’s advocacy efforts. 

Several panelists expressed the view that the agency’s advocacy efforts entail both 

relatively low costs540 and potentially significant benefits.541 As a result, advocacy tends 

to be on net a productive use of agency resources.542 Joseph Kattan described 

competition advocacy as “one of the more important things that the Commission 

does.”543 Another panelist opined that, in certain situations, effective advocacy can be 

more successful or productive than litigation.544 

 

537 Heyer, 7/30 DC Tr. at 75-76. 

538 Id. at 76. 

539 Harrop, Chicago Tr. at 160. See also id. at 160-61 (mentioning successful FTC advocacy efforts to 

prevent passage of anticompetitive state legislation affecting the real estate brokerage industry). 

540 See, e.g., McChesney, Chicago Tr. at 155-58 (stating that in terms of resources, the demands imposed in 

doing competition advocacy are “fairly minimal”); Elhauge, Boston Tr. at 56 (“I would be inclined to think 

competition advocacy is probably some good bang for the buck in part because the cost seems relatively 

low of engaging in competition advocacy.”). 

541 See, e.g., Krattenmaker, 7/30 DC Tr. at 67 (asserting that advocacy can have “potentially large payoffs”); McDavid, 7/30 DC Tr. at 69-70 (“[T]he effect of competition advocacy can be across an entire 

sector. . . . I think that there is real bang for the buck in this area.”). See also ABA TRANSITION REPORT, 

supra note 11, at 29 (“In its 1989 Transition report, the Section noted, ‘Because ill-advised governmental 

restraints can impose staggering costs on consumers, the potential benefits from an advocacy program 

exceed the [FTC’s] entire budget.’”). 

542 See, e.g., Carlton, Chicago Tr. at 271 (“I think you could have a tremendous value added by trying to 

comment on and influence other branches of government that don’t appreciate economics or economists as 

much as the FTC and DOJ.”); McChesney, Chicago Tr. at 154 (arguing that there is a “real comparative 

advantage” to having the personnel at the FTC, including both economists and attorneys, explain to other 

policymakers the competitive implications of their proposals). 

543 Kattan, 7/29 DC Tr. at 126. In its Transition Report on Competition Policy, the American Antitrust 

Institute set forth the following recommendation regarding the antitrust agencies’ advocacy efforts: “The 

agencies should continue to perform a policy advocacy role with Congress, state legislatures and other 

agencies, attempting to stop rules or laws with unintended or unacceptable anticompetitive effects from 

being enacted.” AAI TRANSITION REPORT, supra note 150, at 184. 

544 See Wilks, London Tr. at 38. 

122
Roundtable panelists commented on the scope of, and the legal and economic 

theories underlying, the agency’s advocacy efforts. Former OPP Director Susan DeSanti 

stated: “I think that because your advocacy letters do not tend to be spread out all over 

the place, but rather they are focused and targeted, there is a better chance that you are 

actually having an impact . . . especially when you do it in conjunction with workshops 

and the reports that then come out of the workshops.”545 Joshua Wright argued that, in 

contrast to our understanding of certain areas of antitrust law, such as monopolization, 

our understanding of the harmful competitive effects of certain categories of state 

regulation is relatively strong. As a result, the allocation of resources to competition 

advocacy in these areas is a “no-brainer.”546 Former BC Associate Director Fred 

McChesney stressed the importance and usefulness of having empirical data and analysis 

to back up the agency’s advocacy efforts.547

Other panelists discussed the value of advocacy before certain policymakers. 

Susan Creighton asserted: “[N]obody is going to be an advocate for markets with other 

government agencies like this agency can be.”548 Another panelist recommended that the 

FTC “press more to have a seat at the table and to be consulted more before other areas of 

the government take action that is truly anti-competitive . . . .”549 McChesney argued that 

in certain cases of regulatory capture at another agency, it is helpful to have a 

disinterested outsider, such as the FTC, provide input on proposed regulations.550 Former 

BC advisor Thomas Krattenmaker acknowledged, however, that there may be “a real 

political risk” in undertaking advocacy – particularly in front of other federal agencies.551 

This potential concern stands in sharp contrast with the situation in South Korea, where 

all government agencies wishing to implement a program or activity are obliged to 

submit the program or activity first to the Korean Fair Trade Commission (“KFTC”) for 

review based on competition considerations.552 Another panelist stressed the importance 

of FTC advocacy before Congress. Specifically, the agency ought to reiterate to 

Congress that competition works and should not be supplanted by antitrust 

 

545 DeSanti, 7/29 DC Tr. at 152. 

546 Wright, Chicago Tr. at 161-63. 

547 See McChesney, Chicago Tr. at 197. 

548 Creighton, 7/29 DC Tr. at 76-77. 

549 Fox, NY Tr. at 96. 

550 See McChesney, Chicago Tr. at 164. 

551 Krattenmaker, 7/30 DC Tr. at 68. 

552 Agencies are required by statute to consult the KFTC, but they are not required to implement the KFTC 

advice. Consultation with Korean Fair Trade Commission, Sept. 4, 2008. In Mexico, the government and 

regulatory agencies are required to consult with the Federal Competition Commission on draft legislation 

and regulations that affect competition, and if the agency offers formal advice, to follow it. Mex. L. Fed. 

Econ. Competition, Art. 24, §§ 6-7. Similarly, a Paris roundtable panelist contrasted the role of the FTC 

(and DOJ) with that of the Competition Commissioner in the European Union, who “is part of the cabinet 

and is involved and has some kind of say in every political decision that’s made in the EU about transport, 

energy, communications, et cetera[,] . . . rather than being some kind of outside advocate in a slightly 

remote agency, perhaps, who after the decisions have been made gets some sort of right to make a 

submission.” Fels, Paris Tr. at 18-19. 

123
exemptions.553 A panelist at the Tokyo roundtable recommended that the FTC and DOJ 

advocate the importance of competition before the U.S. International Trade 

Commission.554

External consultations yielded several recommendations for the agency to 

consider in the advocacy area. At least one roundtable panelist recommended increased 

advocacy efforts by the FTC, explaining that “there is enormous value in expanding the 

competition advocacy program.”555 Krattenmaker offered the following advice: “I 

would like to see in the competition advocacy work more extensive and rigorous 

economic work being done right alongside the legal.”556 One panelist recommended the 

building of lines of communications between the antitrust agencies and other federal 

agencies involved in economic decision making but that do not have the economic staff 

that the FTC and DOJ do.557 Another panelist suggested that the FTC reconsider its 

invitation-only approach to advocacy, by which it typically issues advocacies only in 

response to invitations by other policymakers.558 Finally, a Canadian government official 

recommended that a greater proportion of the FTC’s advocacy efforts be conducted in the 

agency’s own name, as opposed to speeches and statements by individual officials which 

are disclaimed as representing only their own views.559

4. Rulemaking 

Returning to questions of enforcement, the Commission’s strongest policymaking 

tool, in addition to litigation, is rulemaking. Through rulemaking under the FTC Act, the 

Commission can prohibit or mandate actions to remedy unfair or deceptive acts or 

practices; through rulemaking under certain other consumer protection laws, it can 

prohibit or mandate actions to address other proscribed conduct. Further, similar to its 

authority to seek civil penalties for violations of orders entered through administrative 

litigation (or settlements in lieu of such litigation), the Commission has had broad 

 

553 McDavid, 7/30 DC Tr. at 70 (addressing then-current legislation creating an antitrust exemption to allow 

retailers to bargain collectively with credit card issuers). See also Venit, Brussels Tr. at 30 (recommending 

that the FTC direct its advocacy efforts toward Congress to educate lawmakers on the complexities of the 

competition problems with which the FTC regularly deals); Crampton, Ottawa Tr. at 5 (recommending that 

the competition authorities “reach out to . . . people who are in a position to pass laws and pass very bad 

laws and do some real damage to our antitrust laws, to build a bridge to that community so that their ears 

are open when you then speak, and try to get them to better understand how markets work and what the 

consequences of their actions might be”). 

554 Tokyo Roundtable, Oct. 7, 2008. 

555 Langer, Boston Tr. at 51-56 (complimenting the FTC’s advocacy efforts “to ward off the most egregious 

anticompetitive behavior at state and local levels either in terms of legislation or some type of regulatory 

action”). 

556 Krattenmaker, 7/30 DC Tr. at 69. 

557 See Carlton, Chicago Tr. at 272. 

558 See Elhauge, Boston Tr. at 56. 

559 Consultation with Canadian Competition Bureau, Sept. 17, 2008. 

124
authority, since 1975, to obtain civil penalties for violations of rules issued under the FTC 

Act and many special statutes.560 

The Commission’s use of rulemaking has undergone significant changes through 

the course of agency history.561 From its early years until the 1960s, the Commission 

adopted a series of interpretive or advisory rules, known as Trade Practice Rules 

(“TPRs”). These were formulated through procedures known as trade practice 

conferences, initiated by members of an industry, authorized by the Commission, and 

presided over by a Commissioner. Typically, each TPR addressed in detail the products 

and practices of a particular industry, in effect setting standards for that industry. TPRs 

were an effort to achieve compliance with the FTC Act by having industry members 

agree to eliminate specific practices considered to be unfair methods of competition. 

Rules that were approved by the Commission included Group I rules, which constituted a 

statement of intent by the Commission as to its interpretation of the FTC Act with regard 

to those industry practices.562 Most TPRs were rescinded by the 1970s.563

 During the 1960s, the Commission began to exercise its rulemaking authority 

pursuant to Section 6(g) of the FTC Act.564 These Trade Regulation Rules (“TRRs”), as 

they came to be known, could be relied upon in an adjudicative proceeding to establish 

that a practice was unfair or deceptive, thus removing this element from the complaint 

counsel’s burden of proof. Between 1963 and 1975, the Commission adopted more than 

20 TRRs. Each addressed a discrete problem within a particular industry or service 

sector, often by requiring the disclosure of information to the consumer. The majority of 

these TRRs became outdated and ultimately were repealed, a result of the Commission’s 

ongoing program of regulatory review and reform. 

 In 1975, Congress granted the Commission express authority to issue substantive 

rules, which included the ability to bring enforcement actions in federal court and to seek 

civil penalties up to $10,000 per violation.565 Magnuson-Moss rulemaking, as this 

authority is known, requires more complex procedures than those needed for rulemaking 

 

560 See 15 U.S.C. § 45(m)(1) (providing for civil penalties for rule and order violations). 

561 See generally Lydia B. Parnes & Carol J. Jennings, Through the Looking Glass: A Perspective on 

Regulatory Reform at the Federal Trade Commission, 49 ADMIN. L. REV. 989 (1997). 

562 Other rules (designated as Group II rules) were “received” by the Commission as expressions of the 

trade. See FTC, ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION FOR THE FISCAL YEAR ENDED 

JUNE 30, 1934, at 93-98 (1934), available at http://www.ftc.gov/os/annualreports/ar1934.pdf. 

563 Some TPRs were replaced by industry guides, which are discussed in more detail in the following 

section. 

564 15 U.S.C. § 46(g). 

565 Magnuson-Moss Warranty – Federal Trade Commission Improvement Act, Pub. L. No. 93-637, 88 Stat. 

2183 (1975) (codified at 15 U.S.C. §§ 57a-b). The remaining Section 6(g) TRRs were grandfathered in to 

the Commission’s new civil penalty authority. See 15 U.S.C. § 45(m)(1)(A). The civil penalty amount 

subsequently was increased to $11,000 per violation pursuant to the Debt Collection Improvement Act of 

1996, Pub. L. No. 104-134, 62 Stat. 974 (1996) (codified at 28 U.S.C. § 2461). 

125
pursuant to the Administrative Procedure Act (“APA”),566 including two notices of 

proposed rulemaking, prior notification to Congress, opportunity for an informal hearing, 

and, if issues of material fact are in dispute, cross-examination of witnesses and rebuttal 

submissions by interested persons. A number of rulemaking proceedings were 

undertaken in the late 1970s as a result of this new grant of authority; only a few of them, 

however, ultimately resulted in a rule. 

 During the past 15 years, 17 rules have been promulgated by the Commission, 

and several existing rules have been amended. In addition, three new rulemaking 

proceedings are in progress. Most new rules have been enacted based on specific statutes 

that authorized the use of APA rulemaking procedures. Many of these rules have been a 

response to issues generated by new electronic forms of consumer sales transactions – 

first telemarketing and later Internet sales – and by the personal information privacy 

issues that inevitably attend electronic marketing. One of the most important and 

successful Commission rulemakings in the agency’s history established the Do Not Call 

Registry,567 whereby consumers can protect their privacy by electing not to receive 

commercial telemarketing calls. Since the Registry was opened in 2003, approximately 

177 million telephone numbers have been registered, and compliance with the rule has 

been high. 

Rulemaking proceedings since the early 1990s often have used an innovative 

procedure known as the public workshop conference. Such conferences bring together 

representatives of those who have a stake in the outcome of the proceeding, including 

affected industries, consumer advocates, and other federal or state government agencies. 

Moderated by a facilitator, the conferences enable roundtable discussion of the issues 

without the formality of an administrative hearing. The discussion is transcribed and 

provides a useful supplement to the written record of comments. 

 While one significant question about rulemaking is when the agency should adopt

a rule, an equally important question may be whether it should retain or modify a rule. 

During the past 15 years, the Commission has made regulatory review and reform a high 

priority. Recognizing that over time some rules and industry guides may become 

obsolete or unnecessary or simply need updating in light of new technologies and 

marketing techniques, the FTC initiated a program to review its rules and guides at least 

once every 10 years. As a result of this systematic review, more than 50 percent of the 

Trade Regulation Rules (i.e. those not mandated by statute) and guides have been 

rescinded. Many of the rules and guides retained have undergone revision to streamline 

or update them. 

External consultations addressed the agency’s rulemaking efforts. A roundtable 

panelist explained a potential perception problem associated with those efforts. 

According to the panelist, many outsiders do not understand the rulemaking process and 

requirements and thus expect the agency to issue rules very quickly. Others understand 

 

566 5 U.S.C. § 551. 

567 See 16 C.F.R. § 310.4(b)(iii)(B). 

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the process, but believe that the FTC has failed to work with Congress in a more 

collaborative manner to try to address some of the constraints on the agency’s ability to 

be more aggressive in the consumer protection area. This, according to the panelist, can 

lead to a perception of unresponsiveness on the part of the agency.568 

Panelists offered conflicting views regarding the agency’s use of rulemaking. 

Two former BCP senior staff members, Jodie Bernstein and Teresa Schwartz, 

commented that the agency should make greater use of its rulemaking authority.569 

Schwartz explained that, although the agency got into “trouble” during the late 1970s for 

engaging in rulemakings on particular matters, such as advertising to children, the agency 

today should be more willing to consider rulemaking because it is an effective means of 

enforcement and the agency has a good process in place to gather stakeholder input on 

proposed rules.570 Another former BCP staff member, however, argued that the FTC 

should wait for Congress to give the agency specific authority to issue rules in a given 

area because that approach not only provides political cover for the agency, it also results 

in “clearer direction” to the agency’s audience.571 In addition, Jerry Cerasale cautioned 

that rulemaking should be “a last resort” that is pursued only after other ways to address 

the problem at issue, such as self-regulation, are exhausted.572

Roundtable panelists also made specific recommendations for future rulemaking 

by the FTC. Data security, for example, was identified as one area in which the agency 

should consider rulemaking.573 Two panelists, including a former BCP Director, 

suggested that the agency consider doing rulemaking not just in the consumer protection 

area, but in the competition area as well.574 In addition, panelists confirmed the 

importance of periodically reviewing the agency’s rules and updating them to ensure that 

they take into account developments in the marketplace, such as new technology.575

 

568 See A. Schwartz, 7/29 DC Tr. at 180. Schwartz did offer praise regarding the CAN-SPAM rulemaking: 

“I hear very little complaints in general from the industry or consumer groups about the decisions that were 

made. Either people did not like CAN-SPAM or liked CAN-SPAM, but there were very little complaints 

about how the rules came out.” Id. at 205. 

569 See Bernstein, 7/29 DC Tr. at 52-53; T. Schwartz, Chicago Tr. at 68-69. 

570 T. Schwartz, Chicago Tr. at 68-69. See also Feigenbaum, NY Tr. at 185-86 (recommending additional 

FTC rulemaking – particularly in the deceptive advertising area). 

571 Luehr, Chicago Tr. at 66-67. 

572 Cerasale, NY Tr. at 177-78. 

573 See Luehr, Chicago Tr. at 98-99 (stating that, given the multiplicity of state laws addressing responses to 

data breaches and the relatively ambiguous standard of “commercial reasonability” in the FTC’s consent 

orders in this area, additional guidance in the form of rules may be useful). 

574 See Bernstein, 7/29 DC Tr. at 53 (“[T]here are areas in both bureaus where there are opportunities for 

the use of rule-making.”); Elhauge, Boston Tr. at 25-26. But see Greene, Boston Tr. at 38-39 (raising the 

question of whether the agency has statutory authority to do rulemaking in the competition area). 

575 See, e.g., Luehr, Chicago Tr. at 67-68. See also Cerasale, NY Tr. at 159-60 (commending the agency 

for holding workshops and undertaking other information gathering efforts to better understand changes in 

technology prior to issuing new regulations). 

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5. Guidelines, Guides, and Advisory Opinions 

 In proposing a trade commission in January 1914, President Woodrow Wilson 

emphasized the guidance the Commission could provide to business: “And the business 

men of the country desire something more than that the menace of legal process in these 

matters be made explicit and intelligible. They desire the advice, the definitive guidance 

and information which can be supplied by an administrative body, an interstate trade 

commission.”576 Consistent with Wilson’s intent, the Commission’s tools include 

guidelines, guides, and advisory opinions. Though none has the same force of law as a 

rule or order, all of these alert businesses to the legal standards the Commission intends 

to apply, or the modes of analysis that it intends to use, in analyzing possible law 

violations. 

Guidelines. To promote transparency and encourage compliance with the law, the 

FTC issues guidelines, typically in conjunction with the Department of Justice Antitrust 

Division, to provide guidance regarding the application of the U.S. antitrust laws. These 

guidelines explain competition policy in specific areas, such as horizontal merger 

review,577 collaborations among competitors,578 licensing of intellectual property,579 and 

health care.580 In the merger context, the agencies took the additional step of issuing 

commentary on their merger guidelines, providing examples of the application of the 

guidelines in specific matters.581

During external consultations, Hillary Greene succinctly identified the various 

purposes and audiences served by such guidelines: “Their express purpose is obviously 

to explain the reasoning and analysis underlying the agency’s exercise of the [its] 

prosecutorial discretion.” For such purpose, the audiences of the guidelines include the 

agency staff, as well as businesses and their counselors. The “implicit purpose” of 

guidelines is “to provide a commentary on the law, to be a sort of an ongoing editorial . . . 

on gaps and ambiguities in the law.” For such purpose, the intended audience is the 

courts.582

 

576 H.R. DOC. NO. 625, 63d Cong., 2d Sess., at 6 (1914). 

577 See FTC & U.S. DEP’T OF JUSTICE, HORIZONTAL MERGER GUIDELINES (rev. 1997), available at

http://www.ftc.gov/bc/docs/hmg080617.pdf. 

578 See FTC & U.S. DEP’T OF JUSTICE, ANTITRUST GUIDELINES FOR COLLABORATIONS AMONG 

COMPETITORS (2000), available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf. 

579 See FTC & U.S. DEP’T OF JUSTICE, ANTITRUST GUIDELINES FOR THE LICENSING OF INTELLECTUAL 

PROPERTY (1995), available at http://www.ftc.gov/bc/0558.pdf. 

580 See FTC & U.S. DEP’T OF JUSTICE, STATEMENTS OF ENFORCEMENT POLICY IN HEALTH CARE (1996), 

available at http://www.ftc.gov/bc/healthcare/industryguide/policy/hlth3s.pdf. 

581 See FTC & U.S. DEP’T OF JUSTICE, COMMENTARY ON THE HORIZONTAL MERGER GUIDELINES (2006), 

available at http://www.ftc.gov/os/2006/03/CommentaryontheHorizontalMergerGuidelinesMarch2006.pdf. 

582 Greene, Boston Tr. at 17-18. See also Hillary Greene, Agency Character and the Character of Agency 

Guidelines: An Historical and Institutional Perspective, 72 ANTITRUST L.J. 1039 (2005) (recounting the 

FTC’s historical approaches to antitrust guidelines). 

128
Roundtable panelists expressed many differing opinions on the value of agency 

guidelines. Several panelists questioned the usefulness of such guidelines, citing the fact 

that there are other forces, such as private plaintiffs and foreign antitrust agencies, that 

will counter or even overwhelm the influence of the agency issuing the guidelines.583 

Another failing of guidelines cited by panelists is the “bland and relatively 

uninformative” nature of the final product that is made public. The perception is that, in 

an attempt to compromise, guidelines can strike a middle ground without clarifying 

doctrine.584 Yet another issue is the perception that in issuing guidelines the agency is 

concerned about “every last possible contingency” and what some party might be able to 

cite against the agency at some point in the future.585 Several panelists raised the 

legitimate concern that any agency guidelines could be subsequently used against the 

agency – particularly in litigation.586

Notwithstanding disagreements with specific guidelines or provisions of 

guidelines, panelists maintained that “guidelines are an exercise in agency 

transparency,”587 and the “appetite of the private bar for guidance[ and] guidelines is 

inexhaustible.”588 Many expressed generally favorable reviews of the FTC and DOJ 

horizontal merger guidelines. Given the dearth of Supreme Court and other case law in 

the merger area, the merger guidelines are viewed as necessary to provide interested 

parties with information regarding the agencies’ merger review process.589 As one 

panelist explained, “Merger law . . . is at best opaque and maybe completely and totally 

incomprehensible. . . . [I]f you can avoid the coin flip that you often get in the district 

court and figure out ahead of time what the likely result of the enforcement agency is, 

you’re way ahead of the game.”590 Hillary Greene noted that the Herfindahl-Hirschman 

 

583 See Kattan, 7/29 DC Tr. at 146 (“[U]nless they can influence policy outside the FTC in a profound way 

– and that is a very difficult thing to do – it strikes me as an exercise in futility.”); DeSanti, 7/29 DC Tr. at 

148 (“[I]t is not like businesses are going to only look at what the FTC has to say.”). 

584 See DeSanti, 7/29 DC Tr. at 146-47 (“[T]oo many times they end up being bland and relatively 

uninformative. No matter what people’s intentions were at the beginning to actually clarify things, 

inevitably disagreements arise and you go towards the middle rather than actually make progress in 

clarifying things.”). 

585 See Kattan, 7/29 DC Tr. at 158-59. 

586 See Greene, Boston Tr. at 32-33 (identifying the concern that guidelines will be used against the agency 

in court, with judges giving the guidelines “undue deference”); Elhauge, Boston Tr. at 37 (echoing concern 

that the courts will use guidelines against an agency, for example, by assuming that that which is not 

prohibited in the guidelines should be allowed); Harrop, Chicago Tr. at 140-41 (arguing that a potential 

danger of issuing guidelines is the prospect of having defendants and even judges turning the guidelines 

into a kind of checklist, each step of which the agency must satisfy, even if it is not analytically meaningful 

to do so). 

587 Campbell, Chicago Tr. at 143. 

588 Fenton, 7/29 DC Tr. at 220. 

589 See DeSanti, 7/29 DC Tr. at 147; Campbell, Chicago Tr. at 143. 

590 Harrop, Chicago Tr. at 137-38. See also McDavid, 7/30 DC Tr. at 81-82 (“The framework that was 

established by the merger guidelines is applied almost universally today.”) (arguing that any specific 

129
Index had been presented to courts before it was incorporated into the 1982 merger 

guidelines, but received a hostile reception until the guidelines were issued.591 Along 

with the publication of merger data,592 the guidelines are a valuable source of 

transparency to the outside world. 

Other guidelines received praise for various reasons. The agencies’ IP licensing 

guidelines received praise from those generally critical of guidelines based on their 

inclusion of new thinking not yet reflected in the case law at the time of their issuance.593 

The health care statements, according to a former state enforcer, “provided enormous 

value to those of us who were advising our clients regarding the enforcement intentions 

of the agencies and had a spill-over effect upon the states in terms of what they were 

likely to do.”594 According to Stephen Calkins, the process of writing the competitor 

collaboration guidelines helped the agency respond to the California Dental595 decision 

and helped contribute to the ongoing discussion about how to evaluate competitor 

collaborations. “This was an area where the agency was going to be bringing cases and, 

so, it did matter.”596

A central issue involving agency guidelines is one of timing – including the 

appropriate times at which to issue and, if necessary, update any given set of guidelines. 

Greene identified the “central tension” in formulating guidelines as follows: waiting until 

there is a sufficient consensus in any particular area of the law, on the one hand, and 

providing certainty and guidance in such area of the law, on the other hand.597 Several 

panelists argued that guidelines are more valuable if there is a “strong consensus” in the 

area of the law addressed by the guidelines.598 Others argued that an agency should not 

 failings within the guidelines – for example, the lack of discussion of potential competition and vertical 

mergers – do not “undercut the value of the fundamental structure for thinking about how one analyzes a 

merger”). 

591 Greene, Boston Tr. at 20. 

592 Panelists expressed strong support for the agencies’ publication of merger review data as having 

“greatly enriched our understanding of what the agencies are actually doing and then greatly enriched the 

discussion about what the agencies ought to do.” Calkins, 7/30 DC Tr. at 86. See also McDavid, 7/30 DC 

Tr. at 86 (“And those merger data are incredibly useful in walking a business person through the likelihood 

that their particular merger will or will not be challenged.”).

593 See DeSanti, 7/29 DC Tr. at 147. 

594 Langer, Boston Tr. at 34. 

595 Cal. Dental Ass’n v. FTC, 526 U.S. 756 (1999). 

596 Calkins, 7/30 DC Tr. at 84. 

597 Greene, Boston Tr. at 31. 

598 See, e.g., Heyer, 7/30 DC Tr. at 79-80 (“I think there’s a stronger consensus behind horizontal merger 

policy, for example, and I think the guidelines there have been of value . . . . To my mind, issuing 

guidelines on things like vertical mergers and . . . Section 2, which none of us fully understand anyway, 

have only limited value. I think an understanding of those things needs to sort itself out better through 

academic work and through research that folks do internally and through proceedings in courts before we 

even think of issuing guidelines there.”); Wright, Chicago Tr. at 146 (arguing that a first principle of 

articulating guidelines should be a certain level of consensus regarding the competitive effects of the 

practice at issue); Harrop, Chicago Tr. at 147 (agreeing that agencies should not issue guidelines absent a 

130
wait until there is consensus; otherwise, the guidelines will not achieve their primary goal 

of providing guidance.599 

Similarly, the proper timing of any necessary updating of guidelines is an issue 

that agencies must consider carefully. As Greene explained, at some point, there exists a 

lag between a given set of guidelines and the agency’s current thinking on the subject of 

such guidelines. It is a “very difficult balance” to know when that lag is sufficient to 

justify an updating of the guidelines. “And we’ve seen instances in the past in which the 

gap between reality and the guidelines is [such] that the guidelines . . . should actually be 

abandoned.”600 Participants in the Tokyo roundtable recommended that the agencies 

revise their competitor collaboration and international guidelines. More specifically, it 

was suggested that the agencies expand the collaboration guidelines to include additional 

examples of their application and to broaden them to apply to conduct among competitors 

that transcends joint ventures.601 Another panelist recommended that the agencies update 

their international guidelines to reflect the increased number of countries with 

competition laws, as well as the increasingly important roles of multinational 

organizations such as the ICN.602 Susan Creighton also cautioned against updating 

guidelines via specific enforcement actions, explaining that a more systematic approach 

is desirable.603

External consultations yielded several suggestions regarding potential FTC 

guidelines. Among the subject areas in which the agency was advised to issue or revise 

guidelines are: clinical integration,604 vertical mergers,605 mergers involving intellectual 

property,606 monopolization,607 interlocking directorates,608 resale price maintenance,609

and “topics that are unique to the FTC,” such as unilateral conduct that is not necessarily 

a Section 2 violation.610 Finally, Greene suggested that, “because the guidelines are so 

 significant amount of experience in a given area); Drauz, Brussels Tr. at 12-13 (“I think you should never 

make a guideline before you have really sufficiently looked at individual cases.”) (noting that a reason why 

it took so long for the European Commission to issue Article 82 guidance was the lack of a sufficient 

number of “valuable precedents”). 

599 See, e.g., Elhauge, Boston Tr. at 37. 

600 Greene, Boston Tr. at 19-20. 

601 Tokyo Roundtable, Oct. 7, 2008. Another participant at the Tokyo Roundtable asked the FTC to clarify 

what kinds of conduct or practices fall under unfair methods of competition. Id.

602 Id.

603 See Creighton, 7/29 DC Tr. at 88-89. 

604 See Campbell, Chicago Tr. at 142. 

605 See Valentine, London Tr. at 116-17. 

606 See id.

607 See id.

608 See Fenton, 7/29 DC Tr. at 221. 

609 Tokyo Roundtable, Oct. 7, 2008. 

610 See Elhauge, Boston Tr. at 26. 

131
clearly geared towards framing the terms of the debate and influencing courts among 

others,” it would be beneficial for agencies to identify and clarify within guidelines where 

they diverge from existing law.611

Guides. With the rescission of most Trade Practice Rules in the 1970s,612

industry guides, which are published in the Code of Federal Regulations, or C.F.R., 

became a vehicle to inform businesses how the Commission would apply Section 5 of the 

FTC Act in specific situations. Industry guides are advisory in nature – that is, they are 

not an independent basis for enforcement actions, and violations do not give rise to civil 

penalties. However, they serve to inform businesses about practices that could be 

considered unfair or deceptive. Industry guides typically focus on particular problematic 

practices in advertising, marketing, or labeling. Promulgation of guides does not require 

formal rulemaking proceedings, but, in recent years, the Commission has solicited public 

comments, and may hold a hearing or workshop, before adopting or substantively 

amending guides. Like rules, industry guides are subject to review every 10 years. 

The agency’s “Green Guides,” for example, are an important illustration of the 

use of industry guides to give advice to businesses making certain types of marketing 

claims. Issued in 1992 and updated in 1996 and 1998, the Guides for the Use of 

Environmental Marketing Claims613 serve to help marketers avoid making environmental 

claims that are unfair or deceptive under Section 5 of the FTC Act. The Green Guides 

are currently under review, and the agency has both requested comments and conducted a 

series of public meetings to discuss various green marketing issues.614

Concerns were expressed by some roundtable panelists regarding the length of 

time involved in the review of some guides. One participant noted the need for greater 

transparency in connection with these reviews, suggesting that the Commission publicly 

announce its next steps in the process or even an approximate time frame for completion 

of the review.615 Others stressed the importance of rescinding guides that the agency 

considers no longer relevant.616

Advisory Opinions. The FTC’s efforts at providing guidance to industry also 

include advisory opinions concerning proposed conduct provided in response to requests 

for advice. On the competition side, BC staff render so-called advisory opinions, which 

often involve issues in the health care field. On the consumer protection side, BCP staff 

 

611 Greene, Boston Tr. at 76-77. 

612 See discussion supra Chapter VI.B.4. 

613 See 16 C.F.R. § 260. 

614 Additional information regarding this review of the Green Guides is available at 

http://www.ftc.gov/bcp/edu/microsites/energy/about_guides.shtml. See also Creighton, 7/29 DC Tr. at 88 

(noting the value of the Green Guides review process to businesses in that market); Greenbaum, NY Tr. at 

184 (same). 

615 See Greenbaum, NY Tr. at 183-85. 

616 See Levine, NY Tr. at 170-72. 

132
render so-called staff opinion letters, which typically address proposed interpretations of 

FTC rules and regulations. Commission advisory opinions, which are issued relatively 

infrequently, are intended to address substantial or novel questions of fact or law or 

subjects of significant interest.617

The subject of advisory opinions did not garner as much attention during the 

external consultations as the subject of guidelines. However, roundtable panelists did 

express support for the agency’s efforts at issuing such opinions. According to one 

panelist, advisory opinion letters, much like safe harbors in guidelines, are valuable in 

that they provide industry with “some confidence” regarding proposed business 

arrangements or courses of conduct – particularly those that require confidence in their 

legality to succeed in the first instance.618

Several panelists, however, called for the Commission – rather than staff – to 

issue more advisory opinions. Stephen Calkins recommended that the Commission issue 

more formal advisory opinions, explaining that, although staff advisory letters can be 

useful in narrow areas in trying to understand “hopeless” laws, such as the Fair Credit 

Reporting Act, an advisory opinion from the Commission is extremely valuable because 

it entails a discussion and consensus reaching among the Commissioners. Thus, 

according to Calkins, the agency should establish a system for providing more 

“collective, official Commission advice” in the form of formal advisory opinions.619 

Other panelists remarked that the general public likely does not appreciate the fact that 

advisory opinions typically come from staff and are not issued by the Commission.620

6. Consumer and Business Education 

Like guidelines, guides, and advisory opinions, business education is yet another 

way to facilitate compliance with the law by firms that want to comply with the law. 

Consumer education is a way to alert consumers to their rights and help them avoid harm, 

including harms from fraudulent operations with little interest in complying with the law. 

During the past 20 years, educating consumers and businesses about their rights 

and responsibilities in the marketplace has become an increasingly important part of 

fulfilling the agency’s consumer protection mission. Enforcement efforts to combat fraud 

 

617 See generally 16 C.F.R. § 1.3. 

618 See Picker, Chicago Tr. at 145 (citing example of patent pools). See also Langer, Boston Tr. at 35 

(stating that advisory opinions have been valuable in providing businesses with certainty regarding their 

proposed courses of conduct). The Commission does reserve the right to revisit any advice, see 16 C.F.R. § 

1.3(c), although, where the Commission itself gave the advice, the rules provide assurance that “[t]he 

Commission will not proceed against the requesting party with respect to any action taken in good faith 

reliance upon the Commission’s advice under this section, where all the relevant facts were fully, 

completely, and accurately presented to the Commission and where such action was promptly discontinued 

upon notification of rescission or revocation of the Commission's approval.” Id. § 1.3(b). 

619 See Calkins, 7/30 DC Tr. at 85. See also DeSanti, 7/29 DC Tr. at 149 (recommending that the 

Commission issue an advisory opinion regarding clinical integration). 

620 See Salinger, 7/29 DC Tr. at 148-49; DeSanti, 7/29 DC Tr. at 149-50. 

133
are enhanced by informing consumers how to recognize and avoid becoming victims of 

fraudulent marketing practices.621 For example, educating consumers not to respond to 

emails that “phish” for financial account information can be a more effective tool to 

combat this practice than bringing successive enforcement actions against numerous 

perpetrators. The Commission also integrates enforcement with consumer and business 

education. Law enforcement actions often are partnered with an education component 

that is announced at the same time and, when the Commission works with other 

enforcement agencies on a sweep, the Commission also works with its law enforcement 

partners to develop the educational component. Information for consumers might include 

how to recognize, avoid, and report a similar scam; for businesses, it might include how 

to avoid running afoul of the law. 

Educating businesses about their legal obligations under a variety of FTC rules 

enhances compliance, and to that end, the Commission issues clear, plain-language 

guides – in print and on video – that pose numerous examples of required or prohibited 

conduct. For example, when the dietary supplement industry began to grow and 

advertise heavily as a result of new legislation (the Dietary Supplements Health and 

Education Act of 1994), industry representatives requested and received specific FTC 

guidance regarding substantiation for advertising claims.622

 The Commission’s increased recognition of the importance of consumer and 

business education has resulted in the transformation – within the Bureau of Consumer 

Protection – of a small office to a Division of Consumer and Business Education 

(“DCBE”) with a staff of 19. DCBE plans and implements public education campaigns 

for consumers and industry through communications and outreach programs that involve 

the use of print, broadcast, and electronic media, special events, and partnerships with 

other government agencies, consumer groups, industry and professional associations, 

businesses, and other organizations. 

More recently, the Bureau of Competition has initiated consumer education 

campaigns designed to inform consumers about the value of competition and the antitrust 

laws generally. Issued in March 2007, the publication Competition Counts informs 

consumers about the benefits of competitive markets, including lower prices, higher 

quality, and greater choice of goods and services. BC’s Guide to the Antitrust Laws

contains an in-depth discussion of competition issues for those with questions concerning 

the antitrust laws.623

 

621 See Conversation with Muris and Pitofsky, supra note 27, at 778 (Pitofsky describing how, in the area of 

misleading health and safety claims, the FTC “combined law enforcement with a multifaceted education 

program – including brochures, special Web sites, public service announcements, news articles, and 

bookmarks – to give consumers the basic information they need to make sound decisions and to protect 

themselves from misleading marketing practices”). 

622 See Bernstein, 7/29 DC Tr. at 17-18. 

623 These competition guides are available at http://www.ftc.gov/bc/guidance.shtm. 

134
External consultations yielded widespread expressions of support for the agency’s 

consumer and business education efforts in the consumer protection area.624 Several 

roundtable panelists agreed that such efforts can be more effective than enforcement 

actions.625 In order to maximize the impact of such efforts, however, it is important to 

convey consumer education messages to outside entities that are in turn able to amplify 

such messages to a wider audience. Lee Peeler, former BCP Deputy Director and current 

President and CEO of the National Advertising Review Council, stressed the importance 

of amplifying the agency’s consumer and business education messages by, for example, 

reaching out to consumer groups and self-regulatory organizations, respectively, and 

having those entities spread the messages to their constituencies.626 

Panelists also offered several recommendations regarding the agency’s education 

efforts on the consumer protection side. One panelist identified two issues that the 

agency should take into account in preparing consumer education materials. First, 

according to the panelist, the types of media to which consumers will be most responsive 

going forward are not necessarily going to be text-based, as they have been in the past. 

As a result, consumer education should be delivered via video and audio, as well as 

text.627 Second, the panelist recommended that the agency’s education efforts take into 

account the latest learnings from the area of behavioral economics in determining which 

mechanisms are most useful in changing consumer behavior.628 Another panelist 

suggested that business education be targeted at small businesses, which may be less 

sophisticated and unable to hire legal counsel to help oversee their compliance efforts.629

At the U.K. consultations, some consumer representatives recommended 

consumer education efforts that are targeted and provide information to consumers at the 

time they need it. The consumer representatives further noted that much consumer 

education does not work for consumers because “people don’t go out seeking information 

until things go wrong, and businesses don’t like to talk about things going wrong.” They 

 

624 See, e.g., DeSanti, 7/29 DC Tr. at 162 (remarking that, on the consumer protection side, the FTC has 

“really made its mark” in the area of consumer education); Marsden, London Tr. at 120 (stressing the 

importance of the consumer education initiatives that the FTC and other agencies pursue to “reach out and 

try to have an impact directly and explain their messaging”). 

625 See, e.g., Peeler, 7/30 DC Tr. at 195 (citing in particular the area of phishing, where the agency has tried 

to change consumer behavior, not just bring cases against phishers); Wilks, London Tr. at 38 (noting that 

consumer education can have more of a “societal impact” than individual law enforcement actions). 

626 See Peeler, 7/30 DC Tr. at 194-95. 

627 See Swire, NY Tr. at 197-98. See also Brendler, NY Tr. at 236-38 (touting video on phishing and 

auction scams created by Consumer Reports WebWatch and noting that younger consumers increasingly 

want their news or information to “come through organic means,” such as through social networking sites, 

games, and mobile phones); DeMarrais, NY Tr. at 276 (recommending that the FTC consider repackaging 

its existing education materials in such a way as “to reach high school students, who are uneducated on 

consumer issues”). 

628 See Swire, NY Tr. at 197-98. 

629 See Cerasale, NY Tr. at 201-02. 

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suggested that insights into consumer behavior, through social marketing and behavioral 

economics, might assist in developing new types of consumer education.630

Panelists disagreed as to the proper role of FTC consumer education on the 

competition side. Susan DeSanti recommended that the agency consider how it might 

better convey to its various constituencies the value of competition, which may not be 

well understood. “If there is an agency that has a mandate that would include education 

on that subject, it is this agency.”631 Others, including former BE Director Michael 

Salinger, however, raised concerns regarding the agency’s expenditure of scarce 

resources on such efforts, suggesting that the agency “think about getting others to do this 

for the Commission rather than having the Commission devote a lot of resources to it.”632

7. Encouragement of Appropriate Industry Self-Regulation 

Meaningful self-regulation is an important complement to the Commission’s law 

enforcement efforts – particularly in the area of deceptive marketing practices. For 

example, the program administered by the National Advertising Division/National 

Advertising Review Council (“NARC”) arm of the Council of Better Business Bureaus 

(“CBBB”) has worked well to obviate the need for Commission action in some instances. 

In cases where the process does not reach a successful conclusion, the matter is referred 

to the Commission with much of the underlying investigative work already 

accomplished. The Electronic Retailing Self-Regulation Program – established under the 

auspices of NARC in 2004 to handle allegations of deceptive advertising in TV 

“infomercials” – has served as an important adjunct to this program. 

In addition, self-regulatory programs have been helpful in areas where the 

Commission has advocated seller restraint in promotions directed to children. In 2006, 

the CBBB launched the Children’s Food and Beverage Advertising Initiative to 

encourage major food marketers to impose voluntary limitations on their advertising to 

children. This effort followed a workshop and report by the FTC, which strongly 

encouraged self-regulation to address the childhood obesity problem.633 The marketing 

of violent entertainment products (such as movies, music, and video games) to children is 

another area in which companies have been encouraged to adhere to industry codes by 

 

630 Consultation with U.K. Consumer Organizations, Sept. 12, 2008. 

631 DeSanti, 7/29 DC Tr. at 163. See also AAI TRANSITION REPORT, supra note 150, at 186 (“To increase 

support for the antitrust mission, the agencies should endeavor to educate the public on competition policy 

and its underlying rationale. The next administration should coordinate with NAAG to add antitrust 

education to high school curricula.”). 

632 Salinger, 7/29 DC Tr. at 163. 

633 See FTC & U.S. DEP’T OF HEALTH & HUMAN SERVS., PERSPECTIVES ON MARKETING, SELFREGULATION & CHILDHOOD OBESITY: A REPORT ON A JOINT WORKSHOP OF THE FEDERAL TRADE 

COMMISSION AND THE DEPARTMENT OF HEALTH & HUMAN SERVICES (2006), available at

http://www2.ftc.gov/os/2006/05/PerspectivesOnMarketingSelfRegulation&ChildhoodObesityFTCandHHSReportonJointWorkshop.pdf. 

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successive FTC reports documenting the results of self-regulation.634 As former 

Chairman Robert Pitofsky has observed, industry self-regulation can be particularly 

suitable in areas, such as advertising, in which governmental restrictions raise substantial 

First Amendment concerns.635

External consultations revealed little, if any, objections to the FTC encouraging 

industry self-regulation. As former BCP Director William MacLeod asserted, asking 

whether it makes sense for the Commission to encourage self-regulation is “like asking 

the cop on the street if it makes sense to encourage people to abide by the law. Of 

course, it does.”636 Another panelist opined that “the FTC’s done an amazing job of 

recognizing what a valuable tool self-regulation is in enhancing and complementing [its] 

role in terms of consumer protection.”637 Implicit in the support expressed for the 

agency’s promotion of self-regulation is the notion that it is a complement to – not a 

substitute for – the agency’s law enforcement efforts.638

According to roundtable panelists, the precise role of the agency in encouraging 

self-regulation matters. Former BCP Assistant Director Darren Bowie argued that that 

role should be a limited one, with the agency setting forth “broad objectives,” while 

leaving it up to industry to devise the implementation of such objectives. If the agency is 

too prescriptive, according to Bowie, it tends to defeat the purpose of self-regulation, 

which is to allow industry to come up with the best way to accomplish certain 

objectives.639 Addressing advertising self-regulation, another panelist attributed the 

success of that program to both the FTC’s support and its measured involvement. In 

other words, “[t]he FTC understands that you need to keep the ‘self’ in ‘selfregulation.’”640

Roundtable panelists provided commentary on efforts by the FTC to initiate and 

support self-regulation in specific areas. Lee Peeler praised the agency’s efforts in the 

 

634 See, e.g., FTC, MARKETING VIOLENT ENTERTAINMENT TO CHILDREN: A FIFTH FOLLOW-UP REVIEW OF 

INDUSTRY PRACTICES IN THE MOTION PICTURE, MUSIC RECORDING & ELECTRONIC GAME INDUSTRIES: A

REPORT TO CONGRESS (2007), available at

http://www.ftc.gov/reports/violence/070412MarketingViolentEChildren.pdf. 

635 See Conversation with Muris and Pitofsky, supra note 27, at 788 (Pitofsky stating: “I have long 

believed that ‘real’ industry self-regulation could be a realistic, responsive, and responsible approach to 

many issues raised by underage drinking. It can deal quickly and flexibly with a range of advertising issues 

and can bring an industry’s accumulated experience and judgment to bear without the rigidity of 

government regulation. It can be particularly suitable in this area where government restrictions, especially 

if they involve partial or total advertising bans, raise very substantial First Amendment issues.”). 

636 MacLeod, 7/30 DC Tr. at 190. 

637 Levine, NY Tr. at 164-65. 

638 To the extent that self-regulation raises competitive concerns in the industry at issue, the FTC – given 

the dual nature of its mission – is in a unique position to balance the competing interests and promote selfregulation that fulfills the consumer protection need without doing harm to competition. 

639 See Bowie, 7/29 DC Tr. at 114-15. 

640 Levine, NY Tr. at 168. 

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area of advertising self-regulation,641 while William MacLeod identified the area of food 

marketing to children as an example of effective self-regulation.642 Another panelist, 

however, criticized the agency’s efforts in the area of behavioral advertising, in which the 

agency’s efforts are sending “a very confusing message” to industry: behavioral 

advertising is a new and emerging area, in which the agency has brought some cases, 

implying that it may bring more; yet, the agency is issuing self-regulatory guidelines, 

implying that it believes industry should self-regulate.643 This concern was echoed by 

some consumer representatives at the U.K. consultations. They emphasized, however, 

that self-regulation is an important tool if regulators use it in a timely and proportionate 

manner – that is, if they do not use a graduated approach such as voluntary guidelines 

followed by a mandatory code of conduct when there is significant consumer detriment in 

the market that can be stopped by government action – and view it as one of a mix of 

tools that will produce good outcomes for consumers.644

8. Partnership and Outreach with Domestic Agencies 

 Another important tool available to the FTC is outreach to domestic agencies. 

The Commission’s engagement with domestic agencies involves efforts at the policy 

level, including advocacy.645 It also encompasses enforcement cooperation, facilitated by 

the Commission’s broad authority to share with domestic law enforcement agencies 

nonpublic information otherwise subject to prohibitions on disclosure.646 Enforcement 

cooperation can facilitate the Commission’s own investigation, where a federal or state 

agency shares expertise or provides investigative assistance. It also can leverage the 

Commission’s limited resources, by enlisting other agencies in undertaking efforts that 

advance the FTC’s mission. 

 The FTC often seeks to maximize its enforcement impact on the consumer 

protection side by coordinating “sweeps” – multiple legal actions filed at or near the same 

time by multiple authorities. Cooperation with domestic (and foreign) enforcement 

agencies is an integral component of these sweeps. In 2008, for example, the 

Commission announced “Operation Tele-PHONEY,” the agency’s largest sweep 

targeting telemarketing fraud. More than 180 cases were filed by the FTC and law 

enforcement partners that included more than 30 federal, state, and local law enforcement 

 

641 See Peeler, 7/30 DC Tr. at 166 (“One of the things the FTC has done [is to] encourage[] the 

development in the advertising area of a self-regulatory system where competitors can go and get those 

cases resolved very quickly, and that system wouldn’t exist except for the encouragement of the FTC when 

it was being developed and the support of the FTC as it was being implemented.”). See also Greenbaum, 

NY Tr. at 148 (“[T]o say that [advertising] self-regulation is working is just an incredible 

understatement.”). 

642 See MacLeod, 7/30 DC Tr. at 191. 

643 See A. Schwartz, 7/29 DC Tr. at 205-06. Encouraging self-regulation in a particular industry, of course, 

does not in and of itself preclude the agency from pursuing cases in such industry. 

644 Consultation with U.K. Consumer Organizations, Sept. 12, 2008. 

645 See supra Chapters IV.C and VI.B.3. 

646 See supra Chapter III.C. 

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agencies, as well as Canadian authorities at both the national and provincial level. These 

telemarketing cases were both civil and criminal, targeting various kinds of fraudulent 

schemes that had snared thousands of consumers and resulted in losses of many millions 

of dollars.647 An earlier 2006 sweep, denominated “Project FAL$E HOPE$,” was 

directed at fraudulent business opportunity and work-at-home schemes. That effort 

included more than 100 law enforcement actions filed by the FTC, the Department of 

Justice, the U.S. Postal Inspection Service, and agencies in 11 states.648 Consumer 

education constituted an important component of both sweeps. 

9. International Partnerships and Outreach 

As discussed in Chapter IV.D, and for reasons discussed therein, the FTC 

recognizes that a competition and consumer protection agency cannot limit its activity or 

vision to its own borders; the FTC devotes significant efforts to international activity, 

coordinated by its Office of International Affairs. As with the Commission’s dealings 

with domestic agencies, these efforts include engagement on policy initiatives and 

practices as well as enforcement cooperation. An important component of the policy 

engagement, discussed in Chapter IV.D, is the FTC’s technical assistance program. 

To obtain the best results from its engagement with foreign enforcers, both in 

bilateral and multilateral contexts, an agency with an effective international program 

develops short-, medium-, and long-term strategies that guide participation in these fora, 

with a clear idea about when the agency wants to take a leadership role and when the 

agency plans to take a more passive or “importing” role. The best-designed program 

identifies areas for teaching, and those for learning, recognizing that the two roles are not 

mutually exclusive. 

Some examples of the FTC’s cooperation on enforcement matters are discussed in 

Chapter IV.D. As examples of the FTC’s efforts to engage in policy matters in bilateral 

settings, the FTC (together with DOJ) regularly forms working groups and holds highlevel and staff-level discussions with the EC’s DG Comp on a range of issues. The U.S. 

agencies also have participated in working groups with competition agencies in Mexico, 

Canada, Korea, and Japan on issues including intellectual property and conduct by 

dominant firms. The international consultations confirmed the importance of these 

bilateral initiatives, and also suggested that more efforts could be directed toward the 

development of additional working groups,649 joint sponsorship of workshops and 

conferences,650 and better sharing of research agendas.651 In the consumer protection 

area, the FTC engages in bilateral policy-related dialogue with counterparts on a wide 

 

647 See supra note 272. 

648 See FTC Press Release, Federal, State Law Enforcers Complete Bogus Business Opportunity Sweep 

(Dec. 12, 2006), available at http://www.ftc.gov/opa/2006/12/falsehopes.shtm. 

649 DC Consultation on International Issues, Nov. 6, 2008. 

650 Consultation with Irish Competition Authority, Nov. 27, 2008. 

651 See Waddams, London Tr. at 68. 

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range of issues, including fraud, consumer redress, privacy, and data security. This 

dialogue includes face-to-face consultations, as well as telephonic, video, and written 

exchanges. For example, the FTC routinely comments on both policy and legislative 

proposals from other jurisdictions on various consumer protection-related issues.652 

At the multilateral level, several organizations facilitate dialogue and doctrinal 

and procedural convergence, including the International Competition Network, the 

Organization for Economic Cooperation and Development, and the International 

Consumer Protection and Enforcement Network.653 Many agencies, including the FTC, 

dedicate many, if not the majority, of their international efforts to activities in these fora. 

Because of the costs of participating in multilateral organizations and meetings,654 the 

consultations stressed that a good international program must prioritize its multilateral 

efforts. The agency must first decide what percentage of resources will be devoted to this 

activity, and then the agency must give careful consideration to where or on what topics 

resources will be spent.655

 

To obtain optimal results from agency-to-agency technical assistance programs, 

the consultations suggested that such programs are most effective when the focus is on 

the practical aspects of law enforcement. More specific indicators offered by panelists 

focused largely on program design. For example, a good technical assistance program in 

competition either is part of a larger technical assistance program or otherwise clearly 

contributes to the improved performance of an economy.656 It is provided on a 

cooperative and consensual basis657 and appropriately tailored to the recipient’s needs,658

and the advisors have a working knowledge of the local conditions.659 

 

652 A recent example of a submission by the FTC to another jurisdiction is a comment submitted to the 

European Commission relating to draft radio frequency identification policy principles. See FTC Staff 

Comments to the European Commission on its “Draft Recommendation on the implementation of privacy, 

data protection and information security principles in applications supported by Radio Frequency 

Identification (RFID)” (Apr. 2008), available at http://www.ftc.gov/oia/commentsrfid.pdf. 

653 Other significant multilateral organizations include the United Nations Conference on Trade and 

Development, regional organizations such as the Asia-Pacific Economic Cooperation, and a number of 

specialized networks that deal with specific aspects of consumer protection. For example, a number of 

international multilateral networks focus on consumer privacy and data security, including OECD’s 

Working Party on Information Security and Privacy, the International Working Group on Data Protection 

in Telecommunications, the International Conference of Data Protection and Privacy Commissioners, and 

the Asia Pacific Economic Cooperation Data Privacy Subgroup. In the area of spam and other online 

threats, there are several networks that focus on both policy and enforcement cooperation, including, for 

example, the London Action Plan and the European Union’s Contact Network of Spam Authorities. 

654 Former Chairman Muris has remarked that achieving success in international consensus building efforts 

“cannot be done on the cheap.” See Timothy J. Muris, Competition Agencies in a Market-Based Global 

Economy, Annual Lecture of the European Foreign Affairs Review (July 23, 2002), available at

http://www.ftc.gov/speeches/muris/020723brussels.shtm. 

655 See Whish, London Tr. at 144-46. 

656 See Korsun, NY Tr. at 129-31. See also FTC and U.S. Dep’t of Justice, International Technical 

Assistance Workshop: Charting the Future Course of International Technical Assistance (Feb. 6, 2008), 

http://www.ftc.gov/oia/wkshp/index.shtm. 

657 See Whish, London Tr. at 149; Consultation with Canadian Competition Bureau, Sept. 17, 2008. 

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On the enforcement side, the Commission’s work with its foreign counterparts 

facilitates its ability to obtain meaningful and timely cooperation from foreign 

counterparts for FTC-generated investigations and litigation matters. Another critical 

dimension is the agency’s ability to influence the enforcement agenda and priorities of 

foreign agencies through notifications, consultations, and other bilateral mechanisms. A 

third dimension is the FTC’s capacity to provide assistance, in appropriate cases, to 

foreign authorities when they request the FTC’s assistance or refer complaints involving 

U.S. businesses. 

10. Other Innovative Approaches to Addressing Specific Problems 

The FTC pursues other innovative approaches to address specific problems. As 

an example, an innovative approach to business guidance has been to enlist the help of 

the media to ensure that deceptive advertising claims are not disseminated. A survey of 

ads for weight-loss products revealed that about half of them contained at least one claim 

that was facially false. In response, the Commission published a guide – appropriately 

titled Red Flag Bogus Weight Loss Claims – describing seven claims for nonprescription 

weight-loss products that should raise red flags because they are always false. FTC 

Commissioners met with members of the media and asked that they “do the right thing” 

by refusing to run ads containing these false claims. Although many initially resisted this 

request, it appears that some have complied. In a follow-up survey, FTC staff found that 

the incidence of “Red Flag” claims had declined significantly. Thus, the Red Flag project 

essentially combined business education with promotion of self-regulation.660

Former Commissioner Leary characterized this approach as “innovative,” 

discounting the notion held by some that it was legally risky under the antitrust laws. 

Leary emphasized that this tactic does not violate the antitrust laws, properly construed. 

He further commended the program for attacking the supply side (i.e. the advertisers) of 

the fraud equation, not just the demand side (i.e. consumers).661

11. Using Multiple Tools to Address a Problem 

In pursuing outcomes that benefit consumers, the FTC can use multiple tools to 

address a particular problem. For example, the agency has used such a multifaceted 

approach in dealing with the issues of rising obesity rates and false or deceptive 

advertising claims about weight-loss products. In addition to the innovative Red Flag 

project mentioned above, the agency has conducted or co-sponsored several public 

workshops to address: the impact of advertising for weight-loss products and programs; 

the information consumers need to evaluate such products; and food marketing to 

 658 Consultation with Agencies at the OECD Latin America Competition Forum, Sept. 10, 2008. 

659 See Korsun, NY Tr. at 130. 

660 Additional information regarding the Red Flag project is available at 

http://www.ftc.gov/bcp/conline/edcams/redflag/. 

661 See Leary, 7/29 DC Tr. at 31-32. 

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children. The FTC has issued reports on these topics; conducted surveys of weight-loss 

advertising; engaged in multimedia education directed to both consumers and businesses; 

and encouraged industry self-regulation and international cooperation.662 Of course, the 

FTC conducts litigation as well, having sued companies that promote their products with 

false or deceptive claims.663 As in other areas of FTC enforcement, often several weightloss cases are announced simultaneously in order to maximize the deterrent effect of the 

enforcement activity. 

The FTC also has used an integrated approach to preventing anticompetitive 

increases in the price of petroleum products, including oil, gasoline, and diesel. Given 

the crucial role that the petroleum industry plays in consumers’ lives and the U.S. 

economy generally, that industry receives the highest level of scrutiny from the FTC. 

Utilizing its law enforcement authority and resources, the FTC has filed actions to enjoin 

petroleum mergers deemed to be anticompetitive.664 The FTC’s enforcement work in 

this area also includes challenging possibly anticompetitive conduct by firms in this 

sector of the economy,665 aided in significant part by the gasoline and diesel price 

monitoring project that was begun 666 in 2002.

 

In addition to enforcement, the FTC engages in significant policy R&D efforts in 

the petroleum area, holding workshops, engaging in relevant research, and drafting 

congressionally requested reports.667 Another tool used by the FTC in this area is 

outreach to domestic agencies and consumers, as exemplified by the agency’s efforts 

following the September 2008 landfall of Hurricane Ike in the U.S. Gulf Coast. In the 

aftermath of the storm, the FTC established a task force comprising staff from throughout 

the agency, with the mission of closely tracking gasoline price trends and supply 

662 Information regarding FTC workshops, guides, reports, and other efforts in the weight-loss area is 

available at http://www.ftc.gov/bcp/menus/resources/guidance/health.shtm. Weight-loss-related consumer 

education materials are available at http://www.ftc.gov/bcp/menus/consumer/health/weight.shtm. 

663 See, e.g., FTC Press Release, Marketers of “Ab Force” Weight Loss Device Agree to Pay $7 Million for 

Consumer Redress (Jan. 14, 2009), available at http://www.ftc.gov/opa/2009/01/telebrands.shtm. 

664 See, e.g., FTC Press Release, FTC Dismisses Administrative Complaint Challenging Acquisition of The 

Peoples Natural Gas Company from Dominion Resources, Inc.: Parties Abandoned Proposed Transaction 

after Commission Challenge (Feb. 4, 2008), available at http://www.ftc.gov/opa/2008/02/dom.shtm; FTC 

v. Equitable Resources, Inc., No. 07-2499 (3d Cir. Feb. 22, 2008) (order granting motion to vacate district 

court decision against the FTC). 

665 See, e.g., Union Oil Co. of Cal., FTC Dkt. No. 9305 (involving allegations that Unocal illegally acquired 

monopoly power in the technology market for producing certain low-emission gasoline for sale and use in 

California; the settlement in 2005 resulted in savings to California consumers of about $500 million per 

year). 

666 See supra note 187. In addition, pursuant to Section 811 of the Energy Independence and Security Act 

of 2007, Pub. L. No. 110-140, the Commission is conducting a rulemaking proceeding addressing 

petroleum market manipulation. Information regarding this rulemaking is available at 

http://www.ftc.gov/ftc/oilgas/rules.htm. 

667 See, e.g., reports cited infra note 809. 

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information, and developing ways to be as responsive as possible to state authorities and 

to individual consumers who might need the FTC’s assistance.668 

 * * * 

As discussed above, the FTC has many tools in its arsenal with which to pursue 

its competition and consumer protection missions. Identifying the appropriate tool or 

tools with which to address each of the many challenges facing the agency in its pursuit 

of those missions is crucial to the agency’s effectiveness. In many instances, law 

enforcement will be the most useful tool; in many other instances, nonenforcement tools 

will be more effective. In some instances, the simultaneous or serial use of several tools 

will yield the best results for consumers. 

 

668 See, e.g., FTC, Consumer Complaints about Hurricane Ike, 

http://www.ftc.gov/bcp/edu/microsites/recovery/hurricane/hurricane-ike-complaints.shtml (website 

allowing consumers to submit complaints about gasoline prices or questionable business practices). 

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PART 3: MEASURING THE EFFECTIVENESS OF FTC ACTIONS

VII. Measuring Agency Effectiveness 

As noted in Chapter I, there is widespread agreement about the agency’s core 

mission, as set forth in its strategic plan: 

To prevent business practices that are anticompetitive or 

deceptive or unfair to consumers; to enhance informed 

consumer choice and public understanding of the 

competitive process; and to accomplish these missions 

without unduly burdening legitimate business activity.669

For assessing agency performance, as also explained in Chapter I, there should be a close 

nexus between what is measured and fulfillment of an agency’s mission. Further, 

performance measurement should focus on outcomes for consumers rather than agency 

output.670 In any event, metrics chosen should ideally answer the question: “what would 

have happened in the absence of [FTC] intervention and in the absence of [FTC] 

activity?”671 If the answer is that consumers are worse off in the hypothetical world of 

no FTC action, such action can be said to have affected consumers positively.672 

 

With an understanding of the value of particular FTC actions, agency heads can 

evaluate whether the resource costs of undertaking certain activities – which are known – 

justify the benefits achieved for consumers or whether the FTC could have achieved 

these benefits more efficiently.673 Further, given scarcity of resources, understanding the 

value of competing programs can help identify the full opportunity cost of forgone 

alternative actions. Knowledge of opportunity costs can help prioritize actions both 

within the FTC and across government agencies. 

Unlike agencies that produce a readily measurable output directly to 

consumers,674 the vast majority of FTC actions are not aimed at consumers directly, but 

rather toward parties – typically business and sometimes government – in an effort to 

stop conduct that threatens to harm consumers.675 For example, the FTC sues businesses 

669 2006 FTC STRATEGIC PLAN, supra note 26, at 1. 

670 See Sidney Shapiro & Rina Steinzor, Capture, Accountability, and Regulatory Metrics, 86 TEX. L. REV. 

1741, 1770 (2008). 

671 Breul, 7/30 DC Tr. at 24-25. 

672 Of course, FTC inaction also can create value for consumers. For example, to the extent that the FTC 

opts not to challenge a merger or nonmerger conduct that is likely to improve welfare, its inaction improves 

consumer welfare. 

673 See Breul, 7/30 DC Tr. at 24. 

674 For example, the United States Postal Service delivers mail, and the Social Security Administration 

assures beneficiaries receive their benefits on time. See WILSON, supra note 16, at 34-36. 

675 Consumer education is an exception to this characterization. Unlike in the case of antitrust violations, 

consumers can take actions to reduce the probability of becoming a victim of fraud and deception. Thus, 

144
for taking actions that violate the consumer protection and competition laws and engages 

in advocacy with governments to discourage anticompetitive regulation. Thus, there is an 

indirect link between FTC action and changes in consumer welfare: the FTC helps 

consumers primarily through its ability to reduce the occurrence of conduct that violates 

consumer protection or antitrust laws or otherwise reduces consumer welfare. Ideally, 

one could measure the direct impact of FTC actions on consumers.676 When this type of 

direct measurement is not feasible, however, it is necessary to look for proxies for the 

impact of FTC actions on consumers, such as the outcomes of enforcement actions and 

the influence of nonenforcement activity on courts and government policymakers. 

This chapter considers a range of possible measurement metrics that are or could 

be used to assess the FTC’s performance. Section A addresses the possibility (and 

challenges) of measuring directly the impacts of the Commission’s actions, as well as the 

possibilities (and challenges) of accounting for impacts that may be less direct but more 

important, such as the deterrent and precedential effects of agency litigation. 

Section B discusses several proxies for measuring the degree to which FTC 

actions further its mission. Specifically, this section describes some of the metrics the 

FTC currently uses in its annual Performance and Accountability Report and also 

examines other performance metrics, including the outcome of enforcement actions, the 

deterrent effect and precedential value of these actions, the FTC’s intellectual leadership, 

the agency’s transparency and guidance (which can facilitate compliance with the law 

without the costs of litigation), and the burdens the FTC places on industry. 

Section C addresses the agency’s relations with its core constituencies. In 

addition to outcomes that are directly or indirectly measurable, having a reputation as an 

agency that can solve problems is important, although not usually readily measurable. To 

maintain its relevancy, a successful agency needs to understand and take action – 

consistent with its mission – on the issues on which the public, Congress, and the White 

House are focused – areas of political value.677 As one panelist explained, organizations 

that are “deaf” to these issues, find themselves “as part of the problem, and not really part 

of the solution.”678

 targeting messages directly to consumers to inform them of these actions can reduce the occurrence of 

fraud and deception. 

676 See, e.g., Breul, 7/30 DC Tr. at 28-29 (“without that focus on outcomes, you’re likely to be spending 

your time on a lot of activity that may or may not be critical to achieving the real purpose and the real 

objective of the Commission”); Calkins, 7/30 DC Tr. at 119 (“you can say that you’ve done all sorts of 

different things and it only begins the discussion about whether those are things that have made the world 

better or worse”). A participant in the external consultations noted that the 1993 Hilmer Commission 

report, Effectiveness of Competition Policy, was particularly effective because of its quantitative character. 

Melbourne Consultation with Private Sector Stakeholders, Oct. 2, 2008. 

677 See Breul, 7/30 DC Tr. at 12. 

678 Id. at 34. 

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A. Direct Measurements of Welfare 

Given widespread acceptance of the FTC’s consumer-focused mission, direct 

measurement of the increase in consumer welfare as a result of FTC actions would be 

ideal.679 There was broad consensus among roundtable panelists that the FTC should aim 

to measure its benefits by assessing welfare and avoid incorporating improved or 

increased “fairness” as a goal or an objective that should be counted as a benefit of FTC 

enforcement.680 Others opined that such decisions between welfare and other objectives 

(fairness or otherwise) were better left to the political process and elected officials rather 

than government agencies.681

Although there is general recognition that welfare is the appropriate measure for 

evaluating the benefits of FTC actions, how best to define “welfare” remains subject to 

much debate. This debate falls along familiar lines of “total” welfare (producer plus 

consumer surplus) versus “consumer” welfare (consumer surplus alone).682 Some argue 

that total welfare is the appropriate standard because it focuses attention on maximizing 

societal welfare.683 Further, producers ultimately are consumers as well (although of 

 

679 See ABA TRANSITION REPORT, supra note 11, at 28 (“As in the merger review context, a key means of 

increasing confidence in the agencies’ non-merger civil enforcement efforts is to conduct a rigorous 

empirical analysis of whether these efforts are enhancing consumer welfare.”). 

680 See, e.g., Bloom, London Tr. at 23; Humpherson, London Tr. at 24. 

681 See Pritchard, London Tr. at 29; Bloom, London Tr. at 31. Indeed, one commentator has noted that if 

fairness “trumps” welfare, then some individuals will be made worse off and, in some circumstances, 

everyone will be made worse off than if fairness considerations were omitted. See LOUIS KAPLOW &

STEVEN SHAVELL, FAIRNESS VERSUS WELFARE 52 (2002); see also Peter Freeman, Chairman of the United 

Kingdom Competition Commission, Is Competition Everything?, Address before Law Society European 

Group, at 10 (July 21, 2008), available at http://www.competitioncommission.org.uk/our_role/speeches/pdf/freeman_law_society_210708.pdf (“The idea that competition is 

just another policy to be weighed in the balance against others is insidious and potentially dangerous to the 

functioning of the economy.”). 

682 Although the term consumer welfare is understood differently depending on the observer, see, e.g., 

ANTITRUST MODERNIZATION COMM’N, REPORT AND RECOMMENDATIONS 3, 26 n.22 (2007) [hereinafter 

AMC REPORT] (“Debate continues about the precise definition of ‘consumer welfare.’”), current usage 

generally favors defining the term to mean the welfare of end consumers. See, e.g., Steven C. Salop, 

Question: What is the Real and Proper Antitrust Welfare Standard? Answer: The True Consumer Welfare 

Standard, Comments Filed with the Antitrust Modernization Commission (Nov. 4, 2005), available at

http://govinfo.library.unt.edu/amc/public_studies_fr28902/exclus_conduct_pdf/051104_Salop_Mergers.pdf

. As a technical matter, total welfare is the area under the demand curve above marginal cost, and 

consumer welfare is the area under the demand curve above equilibrium price. In instances where price is 

equal to marginal cost and marginal cost is constant, total welfare is equal to consumer welfare. 

683 See Jenny, Paris Tr. at 63 (arguing that a focus on consumer welfare is detrimental to an agency’s ability 

to persuade other policymakers because “it seems to pit the suppliers against the consumer”); Dennis W. 

Carlton, Does Antitrust Need to be Modernized?, at 2 (Economic Analysis Group Discussion Paper No. 

EAG 07-3, 2007), available at http://www.usdoj.gov/atr/public/eag/221242.pdf. 

146
other goods),684 and in the long run, gains to producers eventually may accrue to 

consumers in the form of lower prices.685 Others argue that a consumer welfare standard 

is most consistent with the antitrust laws and helps ensure consumers are protected by the 

antitrust laws.686 Some suggest that a middle ground is appropriate – that is, a 

“weighted” surplus standard that would ensure consumer welfare is increased, but not at 

the expense of preventing significantly larger gains to aggregate welfare.687 No panelists 

suggested that the welfare standard used to evaluate FTC actions should differ depending 

on the nature of the action at issue. Likewise, none of the panelists suggested that the 

standard should differ depending on the industry at issue or other characteristics of the 

given matter. Although the debate is an important one, in the vast majority of instances, 

consumer welfare and total welfare align.688 As a result, there only infrequently is a 

conflict between advancing each goal. 

As a practical matter, direct measurement of welfare effects entails comparing 

price and output in the relevant markets before and after the FTC action.689 For example, 

consumers pay higher prices and purchase fewer goods or services than they otherwise 

would in the case of an antitrust violation. As a result, consumers suffer direct financial 

losses, and also forego the satisfaction they could have received from additional 

purchases, had the price been set at the competitive level. Calculating the magnitude of 

 

684 See, e.g., Kenneth Heyer, Welfare Standards and Merger Analysis: Why not the Best?, at 3 (Economic 

Analysis Group Discussion Paper No. EAG 06-8, 2006), available at

http://www.usdoj.gov/atr/public/eag/221880.pdf. 

685 See Padilla, Brussels Tr. at 68. 

686 See, e.g., Jonathan B. Baker, Competition Policy as a Political Bargain, 73 ANTITRUST L.J. 483, 516 

(2006); Russell Pittman, Consumer Surplus as the Appropriate Standard for Antitrust Enforcement, 

(Economic Analysis Group Discussion Paper No. EAG 07-9, 2007), available at

http://www.usdoj.gov/atr/public/eag/225696.pdf; see also Elhauge, Boston Tr. at 23-24 (arguing that the 

FTC should focus on consumer welfare; anything that benefits total welfare also can be made to benefit 

consumer welfare; and total welfare is harder to coordinate nationally because nations have different 

incentives to favor producers or consumers, depending on whether they are importers or exporters). Others 

argue that a consumer welfare standard is appropriate because it helps rebalance a bias toward producer 

welfare, and setting enforcement “preferences” more strictly than ideal helps compensate for “cheating” 

around the edges. See Vickers, London Tr. at 11, 25. 

687 See, e.g., Wolfgang Kerber, Should Competition Law Promote Efficiency? Some Reflections of an 

Economist on the Normative Foundations of Competition Law, at 20 (2008), available at

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1075265. 

688 See, e.g., Baker, supra note 686, at 521 (“The welfare dispute has limited practical importance because 

harm to consumers and harm to aggregate welfare tend to go hand-in-hand.”); Carlton, supra note 683, at 4 

(arguing that, although total welfare is the preferable standard, “[f]or most situations there is unlikely to be 

a different outcome regardless of the standard used. The reason is that actions that achieve efficiencies 

should be expected to help consumers.”). There are some circumstances in which the two standards result 

in different outcomes. See Baker, supra note 686, at 516-18 (describing five circumstances). 

689 See Rubin, 7/30 DC Tr. at 139-40; see also Philip Lowe, The Design of Competition Policy Institutions 

for the 21st Century – The Experience of the European Commission and DG Competition, 3 COMPETITION 

POL’Y NEWSLETTER 1, 9 (2008), available at

http://ec.europa.eu/competition/publications/cpn/cpn2008_3.pdf (“[I]n order to really know whether we 

achieve our ultimate objective of making markets work better, we need to measure the impact of our 

decisions on those markets.”). 

147
these two types of loss – and thus the benefits from FTC action – requires an estimate of 

the shape and position of the demand and marginal cost curves for the product, as well as 

an estimate of the equilibrium price and quantity absent the anticompetitive conduct. 

 Turning to consumer protection, deceptive advertising makes consumers willing 

to buy more at any given price than they would had they not been misled about the 

quality of the product or the level of substantiation for performance claims.690 

Consequently, unlike in the case of anticompetitive conduct, deceived consumers are 

harmed because they generally will buy more of the product (and may pay a higher 

price691) than they would if they knew the product’s true attributes. Calculation of 

consumer injury from deception is straightforward in the extreme case of outright fraud, 

where a seller claims performance capabilities for a product that is in reality worthless. If 

consumers knew the truth before purchase, they would be unwilling to pay any price for 

the product, and all of the expenditures they actually make can be considered injury. In 

addition, scarce resources have been diverted from genuinely productive uses, with a 

resulting loss to society equal to the value of those resources. Therefore, the short-run 

economic benefit from the Commission’s fraud program, for example, can be measured 

directly as the quantity of money consumers would have continued to spend on products 

that FTC enforcement action effectively has removed from the marketplace.692 Further, 

any restitution for consumers that the FTC is able to secure from fraudulent sellers also 

enhances consumer welfare. 

Assessment of consumer injury and the immediate benefit of Commission 

intervention is generally much more complex in cases where there is not outright fraud 

but rather where firms do not substantiate advertising claims or where they omit 

information important to a purchase decision. Although the advertising claims may 

exaggerate the effectiveness of the product, or tout capabilities that do not exist, many 

consumers might continue to purchase the product in the absence of deceptive claims, 

albeit in smaller quantities (and possibly at a lower price). The gap between the demand 

for the product with accurate information and the demand fueled by deceptive claims 

would, in most cases, be extremely difficult to estimate with any precision. A fully 

rigorous analysis would have to take into account the magnitude of the reduction in 

consumer demand if consumers obtained accurate information about product 

performance. Further, if consumers erroneously view a product as having fewer 

substitutes than it actually does, they will be less sensitive to price increases than they 

otherwise would. Finally, as in the case of fraud and anticompetitive conduct, any study 

would have to construct the market price and quantity absent the deception. 

 

690 Technically, anticompetitive conduct causes a movement along the demand curve to a higher price and 

lower output level, whereas deception causes the demand curve to shift outward, causing output to rise and, 

depending on the shape of firms’ cost curves, price perhaps to rise. 

691 The extent to which the price for a product rises with an increase in demand depends on the shape of the 

underlying marginal cost curves of the relevant firms. 

692 The primary longer-term benefit, as discussed below, is deterrence. 

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Of course, events unassociated with FTC actions also affect cost and demand 

conditions and, hence, observed prices. To isolate welfare changes resulting from the 

FTC’s competition and consumer protection actions, it is important to control for other 

factors that also affect market outcomes and that occurred during a similar time frame.693 

This exercise requires constructing a hypothetical control market that is identical to the 

one in which the FTC intervened. One way to construct a control group is to identify 

markets – similar geographic or product markets not subject to the FTC action – to serve 

as benchmarks and then to control statistically for any remaining differences between the 

treatment and control groups. Panelists noted that this type of before-and-after study may 

not be feasible for broad national actions because there would not be an adequate control 

group to serve as a benchmark.694 Such studies, however, may be feasible for narrow, 

targeted efforts concentrated in a single geography or industry.695 

Several panelists addressed the promise and problems associated with direct 

measurement of market outcomes after FTC action in the context of merger 

retrospectives. Because mergers make up a large portion of the FTC’s competition 

caseload, the ability to evaluate the effect of mergers on consumers would go a long way 

toward direct evaluation of the FTC’s competition program. The Government 

Accountability Office recently released a report that calls for more retrospective work on 

the oil industry.696 These discussions, moreover, are illustrative of the methodological 

issues surrounding direct measurement of welfare effects from FTC actions more 

generally.697 

There generally was widespread agreement that reviewing merger enforcement 

decisions ex post potentially could shed light on the value of FTC merger enforcement to 

consumers.698 Panelists, however, also spoke extensively about the limitations of such 

 

693 See Ellig, 7/30 DC Tr. at 19 (noting that to evaluate how the FTC’s activities contributed to observed 

market outcomes, the focus should be on outcomes relative to a control rather than just examining a trend). 

694 See Rose, Boston Tr. at 93-94; Rubin, 7/30 DC Tr. at 139. 

695 See Rubin, 7/30 DC Tr. at 139. 

696 GOV’T ACCOUNTABILITY OFFICE, ENERGY MARKETS: ANALYSIS OF MORE PAST MERGERS COULD 

ENHANCE FEDERAL TRADE COMMISSION’S EFFORTS TO MAINTAIN COMPETITION IN THE PETROLEUM 

INDUSTRY (2008), available at http://www.gao.gov/new.items/d081082.pdf. 

697 As discussed above in Chapter VI.B.7, the FTC promotes industry self-regulation where appropriate. 

Professor Chris Hoofnagle submitted an online comment recommending that the FTC “develop standards 

for evaluating the efficacy of self-regulation.” In doing so, Hoofnagle recommended that the agency define 

how long self-regulation should take to solve the problem at issue and what an acceptable solution is. 

Online Submission of Chris Hoofnagle, Aug. 27, 2008. 

698 See, e.g., Wright, Chicago Tr. at 171; Carlton and Nevo, Chicago Tr. at 216-17, 220-22. Perhaps the 

most positive voices regarding retrospective work were Ghosal (7/30 DC Tr. at 242-44, 273-74), who sees 

such work as one of many ways to get potentially useful information about antitrust effects, Picker 

(Chicago Tr. at 166-69), and Scheffman (NY Tr. at 79-80). In addition, Padilla (Brussels Tr. at 80-81) 

noted the ease and low cost of doing stock market-based event studies as a means of evaluating the 

effectiveness of mergers, although some DC roundtable participants derided stock market-based studies. 

See, e.g., Werden, 7/30 DC Tr. at 227. Much merger retrospective work has been done in the U.S. and in 

Europe. Some of that work has been funded by governments, but other studies have been done 

independently. For a recent survey of several merger retrospectives focused on pre- and postmerger price 

149
studies.699 For example, it can be hard to devise controls for the counterfactual (“butfor”) world for allowed and blocked mergers, which can affect the inferences that can be 

drawn from merger retrospectives. Further, studying only challenged mergers is likely to 

lead to conclusions that the agency makes more errors than it actually does, because 

liability in those matters tends to be the least clear cut and therefore most prone to agency 

error and, moreover, may result from aggressive enforcement intended to enhance 

deterrence.700 One commenter, however, noted that retrospective results can be valuable 

especially if they indicate that prices rose after the parties consummated an unchallenged 

merger, because this result would run counter to this “selection bias.”701 The extent to 

which any retrospective could be generalized beyond the merger (or mergers) evaluated 

is also unclear, given that each merger is unique both factually and analytically.702 One 

also can criticize selective self-assessment work due to potential researcher bias, which 

may be one reason to have assessments conducted by those outside the FTC.703 Finally, 

participants noted that the retrospective approach cannot measure the most important 

aspect of antitrust – the value of deterrence. The benefits of deterrence, moreover, may 

be dispersed through many markets, making their measurement even more difficult.704 

Dennis Carlton proposed that a more effective way to conduct a merger 

retrospective may be to use internal agency predictions as the benchmark rather than 

 effects, see Matthew Weinberg, The Price Effects of Horizontal Mergers, 4 J. COMPETITION L. & ECON. 

433 (2008). For an example of work done on 10 horizontal mergers for the U.K. OFT, see Eric Morrison & 

David Elliott, PwC Economics, Ex Post Evaluation of Mergers: A Report Prepared for the Office of Fair 

Trading, Department of Trade and Industry, and the Competition Commission (OFT Economic Discussion 

Paper, 2005) [hereinafter OFT/PwC, Ex Post Evaluation], available at

http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft767.pdf. For a broader description of pre-2002 

work on merger retrospectives, see Paul A. Pautler, Evidence on Mergers and Acquisitions, 48 ANTITRUST 

BULL. 119, 166-84 (2003). 

699 See Carlton, Chicago Tr. at 218-22; Heyer, 7/30 DC Tr. at 88-89; Krattenmaker, 7/30 DC Tr. at 94-95; 

Werden, 7/30 DC Tr. at 212-13, 228-29, 252-55. See also Dennis W. Carlton, The Need to Measure the 

Effect of Merger Policy and How to Do It (Economic Analysis Group Discussion Paper No. EAG 07-15, 

2007), available at http://www.usdoj.gov/atr/public/eag/228687.pdf (calling for ex ante predictions from 

the antitrust agencies regarding postmerger effects on price, output, and dimensions of quality or 

innovation). 

700 See Wickelgren, Chicago Tr. at 209-10. Providing a cautionary note on self-assessments, Damien 

Neven and Hans Zenger recently have argued that such ex post assessments might be misleading to 

regulators and may cause agencies to choose the wrong strategies. See Damien Neven & Hans Zenger, Ex 

Post Evaluation of Enforcement: A Principal-Agent Perspective (DG Comp Discussion Paper, 2008), 

available at http://ec.europa.eu/dgs/competition/economist/ex_post_evaluation.pdf. 

701 Chicago Tr. at 291-92 (audience member Joe Farrell). 

702 See Heyer, 7/30 DC Tr. 88-89. 

703 Several panelists mentioned that assessments of outcomes (particularly merger retrospective work) 

might best be done by those outside the agency to avoid such potential bias problems. See Salinger 7/29 

DC Tr. at 143-44; Crandall 7/30 DC Tr. at 203, 271; Werden, 7/30 DC Tr. at 272. Consultation 

participants also indicated that the ex post evaluation of DG Comp projects is occasionally done, and it is 

typically contracted out. Consultation with DG Comp, Oct. 21, 2008. 

704 See Wright, Chicago Tr. at 135 

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merely to rely on pre- and postmerger data to construct a hypothetical but-for market.705 

This approach would require the agency to make more explicit predictions about the 

likely outcome of mergers, as well as explain the basis for those predictions, and it would 

permit the agency to determine not only whether its predictions are accurate but also 

whether particular economic modeling techniques are accurate or whether there is bias.706 

In Carlton’s view, such an approach would result in more robust conclusions than merely 

taking a sample of mergers to determine whether competition seems to have been harmed 

or improved.707

The Office of Fair Trading recently has pursued retrospective work by performing 

an ex ante analysis that results in estimates and baselines for the assessment of 

mergers.708 The ex ante estimates assist in any ex post evaluations. Although it has not 

frequently performed ex post evaluations, OFT usually uses external parties to conduct 

those evaluations in order to avoid possible bias.709 For example, OFT, along with the 

Competition Commission, commissioned PricewaterhouseCoopers (“PwC”) to review 

mergers cleared by the Competition Commission to determine whether the clearance 

decision was correct.710 

Other proponents of merger retrospectives argued that they need not all be pricefocused, state-of-the-art empirical projects, but rather they can be useful if they provide 

replicable measures of postmerger performance on any of several dimensions. For 

example, former BE Director David Scheffman noted the relative ease of doing merger 

retrospectives based on customer surveys.711 In addition, Nancy Rose and former 

Commissioner Dennis Yao proposed doing more merger retrospective work focused on 

the attainment of predicted merger efficiencies.712 

Apart from the conceptual concerns with merger retrospectives, several panelists 

highlighted the difficulty of obtaining useful data as a constraint on any efforts to perform 

 

705 Carlton, Chicago Tr. at 220-21. 

706 Id. 

707 Id. at 228. 

708 Consultation with OFT, Sept. 11, 2008. 

709 See supra note 703. 

710 See OFT/PwC, Ex Post Evaluation, supra note 698. PwC looked at economic indicators such as entry 

and innovation and conducted interviews. PwC determined that in one case it was too early to tell if the 

enforcement decision was correct; in the other nine cases, the decision was found to have been correct. Id.

at 2. 

711 Scheffman, NY Tr. at 79-80. 

712 Rose and Yao, Boston Tr. at 118-21. Presumably these efficiency-focused retrospectives might follow 

the mold of that done for the Union Pacific/Southern Pacific rail merger. See Denis A. Breen, The Union 

Pacific/Southern Pacific Rail Merger: A Retrospective on Merger Benefits (FTC Bureau of Economics 

Working Paper No. 269, 2004), available at http://www.ftc.gov/be/workpapers/wp269.pdf. Ghosal (7/30 

DC Tr. at 273) also suggested a focus on efficiency retrospectives following the Breen case study model. 

That study may have been unique, however, because the author had access to extensive records of the 

Surface Transportation Board as well as to information voluntarily provided by the merging firms. 

151
retrospective studies.713 As one panelist explained, “as an academic to get data, and 

especially these days, is very difficult. . . . [T]he conditions under which private parties 

hand academics data is an enormously controversial subject these days.”714 Further, 

although the FTC may have the ability to obtain information before the merger and turn it 

over to academics for analysis in some circumstances,715 this does not alleviate the 

problems with obtaining postmerger data. As Carlton noted, “even if you can get the 

DOJ and FTC economists to give you data, it’s not obvious you can get it from the 

industry after the merger has closed. . . . I think that’s been one of the difficulties with 

doing retrospective studies.”716 Some suggested that conditioning access to data as part 

of resolving an inquiry may be one way to obtain useful information for a retrospective 

study.717

 Although reliable data for merger retrospectives is difficult to obtain, getting the 

data is possible if one is willing to bear (and impose) the substantial acquisition costs. 

For example, the FTC recently released three economic working papers that examine the 

after-effects of four hospital mergers in three areas: (1) the east bay area of San Francisco 

in 1999; (2) the northern Chicago lakeside area in 2000; and (3) Wilmington, North 

Carolina in 1998.718 Each paper measures price effects of the merger based on 

information from local insurers who pay for the hospital care and uses econometric 

modeling and multiple different control groups of hospitals to obtain reliable 

comparisons. The results across the markets are quite diverse and, therefore, of interest. 

As can be seen from the discussion above, directly measuring the change in 

consumer welfare from FTC actions is fraught with difficulties. Even if done perfectly, 

moreover, these techniques probably would fail to capture the full deterrent and 

precedential effects from competition and consumer protection enforcement. As 

 

713 See, e.g., Carlton, Chicago Tr. at 242; Heimler and Leveque, Paris Tr. at 120-21 (discussing the 

possibility of conducting such reviews in the European Commission context). 

714 Picker, Chicago Tr. at 175.

715 See supra note 326. 

716 Carlton, Chicago Tr. at 242-43. 

717 See Picker, Chicago Tr. at 175 (“you guys obviously have a mechanism for getting access to information 

and can do this as part of a consent decree that I don’t begin to have”); id. at 176 (suggesting a 

retrospective version of the Hart-Scott-Rodino Act). Another panelist argued that “the FTC actually might 

have leverage to say, well, instead of closing this investigation, how about we agree to close it on the 

condition that you turn over data so that we can study the effects in the future?” Wickelgren, Chicago Tr. 

at 243. Carlton agreed that this is a good idea, generally, but indicated that, in his experience, the 

enforcement agencies disfavor this approach, especially the Department of Justice. See Carlton, Chicago 

Tr. at 243 (“I think the question [for the agencies] is does it impinge on you getting something that is above 

and beyond what your charge is that you’re entitled to.”). 

718 Steven Tenn, The Price Effects of Hospital Mergers: A Case Study of the Sutter-Summit Transaction

(FTC Bureau of Economics Working Paper No. 293, 2008); Deborah Haas-Wilson & Christopher Garmon, 

Two Hospital Mergers on Chicago’s North Shore: A Retrospective Study (FTC Bureau of Economics 

Working Paper No. 294, 2009); Aileen Thompson, The Effect of Hospital Mergers on Inpatient Prices: A 

Case Study of the New Hanover-Cape Fear Transaction (FTC Bureau of Economics Working Paper No. 

295, 2009). These working papers are available at http://www.ftc.gov/be/econwork.shtm. 

152
discussed in more detail below, these benefits are likely to be more important than the 

direct impact of stopping particular anticompetitive, unfair, or deceptive conduct. For 

example, accurate measures of the price and quantity effects of a successful antitrust 

action will capture the direct impact of preventing the particular anticompetitive conduct 

in question, and depending on the time frame, it also may capture some of the deterrent 

and precedential effects (to the extent there are any) flowing from FTC enforcement. 

This measurement, however, would fail to capture improvements in consumer welfare 

from deterrent and precedential effects that spill over into different product and 

geographic markets. To capture fully such improvements in consumer welfare would 

require identifying the spillover markets and then measuring price and quantity effects in 

each of these markets. 

Directly measuring the change in consumer welfare due to research and advocacy 

is likely to be even more difficult than measuring the full impact of enforcement actions. 

These important FTC tools affect consumer welfare in subtle ways, and often in diffuse 

markets. For example, past research on optometric business practices and the real estate 

brokerage industry likely has influenced state laws regulating these industries. To 

capture fully the welfare effects of this research, however, would require isolating both 

the marginal impact of FTC research on state regulation and the impact of positive 

regulatory changes on price and output in the relevant markets. Further, as with 

enforcement actions, research and advocacy are likely to have spillover deterrent effects 

in related markets. For example, successful advocacy in one state may prevent other state 

regulatory bodies from entertaining similar restrictions on competition, and research 

often can have applications beyond the industry on which it is focused. 

 Finally, the FTC provides guidance to parties in an effort to prevent antitrust and 

consumer protection violations in the first instance. It also tries to minimize the costs it 

imposes on parties, both in terms of direct compliance costs and errors in case selection. 

That there is likely to be a far more attenuated link between these FTC actions and 

market outcomes than between enforcement and market outcomes exacerbates the 

measurement issues discussed above. 

 

B. Proxies for Direct Welfare Measurements 

As discussed above, there are inherent difficulties associated with the direct 

measurement of the change in welfare from FTC actions. Although it may be possible to 

measure the direct benefits of specific FTC actions in some circumstances, more often the 

agency must rely on proxies – often focused on agency outputs or intermediate outcomes 

– to gauge welfare effects. 

The FTC currently undertakes an annual performance evaluation and submits a 

Performance and Accountability Report (“PAR”) 719 in accordance with several statutes, 

 

719 FTC, PERFORMANCE AND ACCOUNTABILITY REPORT: FISCAL YEAR 2008 (2008) [hereinafter FTC PAR], 

available at http://www.ftc.gov/opp/gpra/2008parreport.pdf. 

153
including the Government Performance and Results Act (“GPRA”).720 Congress 

designed GPRA to improve government efficiency, and it requires agencies to develop 

strategic goals, define plans to achieve these goals, and develop means to measure agency 

performance relative to these goals. In the PAR, the FTC broadly sets out four objectives 

for its strategic goals to protect consumers and maintain competition: (1) identify fraud, 

deception, unfair practices, and anticompetitive conduct; (2) stop this conduct; (3) 

prevent consumer injury through education; and (4) engage in research, reports, 

advocacy, and international cooperation.721 The PAR does not measure changes in 

welfare directly, but instead uses a combination of output and outcome measures to 

assess the FTC’s fulfillment of its mission.722 Below is a discussion of metrics used in 

the FTC’s PAR as well as other indirect measurements of the FTC’s success in fulfilling 

its mission, such as the outcome of enforcement actions, the deterrent effect and 

precedential value of those actions, the FTC’s intellectual leadership, and the burdens the 

FTC places on industry. 

1. Enforcement Success 

The FTC primarily is an enforcement agency. Antitrust and consumer protection 

enforcement provides benefits to consumers directly in the form of arresting welfarereducing conduct. The benefits of enforcement also accrue in ways that are hard to 

measure in a systematic, empirical manner. Cases that deter future welfare-reducing 

conduct or that clarify or move legal doctrine toward a more welfare-enhancing rule also 

provide an important benefit. This section examines the strengths and weaknesses of 

using certain metrics to measure the success of FTC enforcement. 

a. Number of Cases and Win Rates 

As discussed in Chapter VI.B.1, panelists generally agreed that focusing on the 

number of cases filed in a given year is not likely to provide a good indication of the 

extent to which the FTC is fulfilling its mission to promote consumer welfare. As 

discussed in Chapter I, the agency ideally should define its mission in terms of ultimate 

outcomes for consumers, not agency output. Accordingly, agency assessment should 

focus on actual outcomes, rather than agency output, unless there is a strong 

demonstrated link between the output, such as number of cases brought, and consumer 

welfare.723 Although at one level bringing cases can demonstrate that “the cop is really 

 

720 Some commentators have been critical of such GPRA reports issued by agencies, although not the 

FTC’s specifically, describing them as typically containing “a sunny set of invented statistics designed to 

reassure their overseers that they are doing fine.” Shapiro & Steinzor, supra note 670, at 1744. The result, 

they argue, is that GPRA “has generated a mind-boggling whirlwind of reassuring statistics, cheerful 

narrative, and assurances that all is well at whichever regulatory agency is justifying its performance.” Id. 

at 1760. Nonetheless, these commentators offer several principles for improving these types of reports, 

including a focus whenever possible on “outcomes[s], rather than output[s],” which is consistent with the 

FTC’s long-run objectives for its PAR. Id. at 1770. 

721 FTC PAR, supra note 719, at 36-40. 

722 See id. at 34. 

723 See Ellig, 7/30 DC Tr. at 25-26. 

154
on the beat,”724 and thereby boost deterrence, unless there is an empirically demonstrated 

nexus between consumer welfare and the sheer number of cases brought (including 

merger challenges), this measure alone is unlikely to capture the FTC’s impact on 

consumer welfare.725 Further, counting cases is not a completely reliable measure of 

deterrence benefits because the absence of enforcement activity could signal either 

significant deterrence or none at all.726 One panelist starkly explained, for example: 

“Economists would never say number of cases is a good measure of anything, in 

particular.”727 Similarly, another panelist stated with respect to consumer protection 

enforcement that “the mission of the FTC is not to bring cases. The mission . . . is to stop 

deception, stop unfairness.”728 

 Although less problematic than counting case filings, primarily focusing on the 

number or percentage of cases won also would likely fail to provide meaningful 

information on the effectiveness of the FTC’s enforcement activities. An agency must 

win some percentage of its cases to preserve credibility,729 but as one panelist noted, “the 

function of the agency as an enforcement agency is to get the right answer. It is not to 

win cases for the sake of winning cases.”730 A similar point was made with respect to the 

evolution of the FTC’s approach to advertising – from merely looking for deception cases 

that could be won in court to considering ways to “get at whatever we think may be 

deceptive about [the advertising in question] without interfering with or dismantling the 

benefits of the advertising.”731 Clearly, winning cases that do not advance, or even 

hinder, consumer welfare does not further the FTC’s mission. 

Further, to the extent that only the closest cases are brought, the agency should 

not expect to see a near-perfect win rate; a high win rate may signal that the FTC is only 

challenging easy-to-win cases and thus underdeterring bad conduct. For example, two 

former Bureau of Competition directors noted the value of the FTC’s actions in the patent 

settlement area, although they have not met with uniform success. As William Baer 

noted: 

 

724 McDavid, 7/30 DC Tr. at 52. 

725 Indeed, if a particular case harmed consumer welfare, its deterrent effect might actually cause further 

harm. 

726 See Wilks, London Tr. at 33-35. 

727 Rubin, 7/30 DC Tr. at 139. But see Peeler, 7/30 DC Tr. at 136 (acknowledging that the number of cases 

the FTC brings “can mean anything,” but advocating its use as a measure of FTC performance because “my 

experience is year-in and year-out, at the end of the year, people want to know how many cases you 

brought”). 

728 MacLeod, 7/30 DC Tr. at 142-43. 

729 See Temple Lang, Brussels Tr. at 39 (“You, obviously, have to win a reasonable proportion of them or 

your reputation will suffer.”). 

730 Kattan, 7/29 DC Tr. at 158. 

731 MacLeod, 7/30 DC Tr. at 179. 

155
The Schering case also stands for the notion, you can do a 

lot of good and lose the case. Even though the standard 

adopted by the Commission was rejected by the Eleventh 

Circuit, the Supreme Court refused to grant cert, the fact of 

the matter is that settlements now are scrutinized more 

carefully by the parties to figure out is this defensible from 

a competitive point of view by light years over the way 

they were 10 years ago. The sunlight is on. The spotlight 

is on. It means that behavior has changed. Even though 

people perhaps are not going as far as the Commission 

today thinks is appropriate, the fact of the matter is some of 

the stuff that was largely indefensible just ain’t happening, 

and it is because the Commission was the cop on the 

beat.732

Susan Creighton echoed this point, explaining that “win, lose, or draw, I think the 

Commission has done a huge amount of good work in bringing those series of cases.”733 

 Panelists observed that the reason behind a string of losses is likely to be a more 

important indicator of performance than a low win rate itself.734 As noted above, if the 

FTC is losing tough cases involving complex and unsettled areas of law, losses are not 

likely to be a signal of poor performance.735 If, however, the FTC is losing easy cases, 

this would signal a need to improve performance. Further, if losses occur in cases that 

are “frivolous” to begin with, or cases that rest on legal or factual premises that 

consistently have been rejected by courts or are out of step with current economic 

learning, then a high loss rate may signal a need to reassess internal thinking on the type 

of conduct that violates the FTC Act.736

Currently as part of its PAR, the FTC reports the positive outcomes from 

investigations and cases. Specifically, for consumer protection enforcement, the PAR 

includes the number of orders or other direct interventions with business that result in a 

change in business conduct.737 For competition enforcement, the PAR includes the 

percentage of positive results for cases the FTC brings, including a win in court, a 

consent agreement, or abandonment of an anticompetitive transaction after the FTC has 

 

732 Baer, 7/29 DC Tr. at 118-19. 

733 Creighton, 7/29 DC Tr. at 119. 

734 See Angland, NY Tr. at 65 (“[A] low winning percentage doesn’t necessarily mean you shouldn’t be 

bringing cases. . . . It depends on why you’re losing.”). 

735 See id.; Boast, NY Tr. at 53. 

736 See Boast, NY Tr. at 52-53 (arguing that the FTC should be more troubled by a hypothetical 20 percent 

win rate if it were bringing frivolous cases than if it were bringing novel cases like Rambus and Unocal); 

Angland, NY Tr. at 65 (“[If losses are because] you say, oh no, entry is hard here and time and again courts 

say, no, entry is possible here, then I would want to at least think really hard about whether I’m analyzing 

properly.”). 

737 FTC PAR, supra note 719, at 48. 

156
raised antitrust concerns.738 Importantly, the PAR target for positive outcomes is not 100 

percent. Rather, it is set at 80 percent to reflect the fact that if the FTC is selecting cases 

properly, as discussed above, it is unlikely to achieve a positive outcome in all 

instances.739 At the same time, if the FTC carefully chooses when to issue second 

requests or to open a nonmerger investigation, it also should be expected to win a 

substantial majority of the cases it ultimately prosecutes. The FTC also measures the 

percentage of merger and nonmerger investigations that result in one of the following 

outcomes: Commission authorization of a complaint in federal court or an administrative 

complaint; a consent agreement; resolution of antitrust concerns without enforcement 

action; or closing an investigation without subsequent events indicating that the conduct 

in question harmed competition.740 Again, this measure is designed to provide an 

indication of whether the FTC is effectively identifying merger and nonmerger conduct 

that is likely to cause consumer harm.741 

 

b. Deterring Misconduct 

By demonstrating that it can detect, and will prosecute, violations of the antitrust 

and consumer protection laws, the FTC reduces the future level of such violations.742 As 

several panelists noted, deterrence should be the key criteria when choosing enforcement 

priorities because the value of deterrence – the discounted present value of all future 

harmful conduct that does not occur – is likely to swamp the one-time cost of stopping 

illegal activity.743 The stronger the deterrent effect, moreover, the larger the avoided 

damage. Thus, the extent to which particular FTC actions deter future conduct is likely 

to be a more relevant metric to measure the quality of outcomes than the amount of 

redress in a particular case.744 Indeed, one panelist argued that deterrence “should be the 

holy grail of enforcement[;] enforcement should be operated as far as possible to 

maximize deterrence.”745 Although cases implicating large markets can provide large 

immediate benefits, when the FTC challenges conduct in a small case, the action 

 

738 Id. at 69. 

739 Id. at 67 (“Some cases involve very close issues, on which reasonable minds can and do differ. . . . 

[T]he agency inevitably must bring cases that pose litigation risks – especially where there is no clear 

precedent and the FTC is seeking to establish a new legal principle.”). 

740 Id. at 62-63. 

741 See id. at 60-61. 

742 See Angland, NY Tr. at 40-41 (discussing how the FTC’s lack of ability to fine has a negative impact on 

the ability of the FTC to deter anticompetitive conduct); Mundt, Paris Tr. at 134-35 (explaining that when 

selecting cases, a competition agency should never leave a particular market alone or it would leave 

anticompetitive conduct in such markets undeterred). 

743 As one panelist noted, “The antitrust system, like much of the legal system in this country, is 

fundamentally a deterrent system. Assuming that works, then the largest effect is in discouraging firms 

from taking actions that we’ve deemed to be illegal or hopefully deemed them to be illegal because they’re 

not in the public interest.” Rose, Boston Tr. at 93. See also Rubin, 7/30 DC Tr. at 139; Picker, Chicago Tr. 

at 132-33; Shapiro, Chicago Tr. at 204; Wickelgren, Chicago Tr. at 262; Jenny, Paris Tr. at 64. 

744 See Rubin, 7/29 DC Tr. at 139. 

745 Wilks, London Tr. at 33. 

157
nevertheless may have a large deterrent effect if it prevents similar conduct in many other 

small or large markets.746

Unlike investigating a bank robbery, where it is clear that the law has been 

broken, antitrust investigations often involve determining whether the law has been 

broken in the first place.747 When designing and implementing an enforcement agenda, 

an agency should recognize that in areas where the line between what is legal and illegal 

is uncertain, enforcement is likely to deter both desirable and undesirable conduct, and 

the agency should strive to strike the optimal balance between the costs associated with 

both under- and overdeterrence. As one panelist explained, “[W]hat you really care 

about is not just how much you punish bad behavior. What you care about is how big the 

difference is between the expected penalty for good behavior and bad behavior.”748 

When implementing an enforcement program in areas where it may be especially difficult 

to distinguish procompetitive or neutral conduct from anticompetitive conduct, sensitivity 

to these types of error cost concerns can militate toward selecting cases involving 

relatively small markets.749 

 Currently, the FTC does not directly measure the deterrent effect of its actions, 

noting that it is “difficult, if not impossible, to measure precisely the value (in monetary 

terms or otherwise) of deterrence . . . .”750 It does, however, count the number of print 

media articles (and the circulation of the print media) related to competition and 

consumer protection activities and also monitors hits on the FTC’s website related to 

business guidance for FTC enforcement of the competition laws.751 It is reasonable to 

assume that deterrence of misconduct (or facilitation of lawful conduct) is a positive 

function of the extent to which potential lawbreakers are informed about the probability 

of FTC action or advised of ways to avoid such action. Thus, although not a direct 

measure of deterrence, these PAR metrics likely are positively related to deterrence in 

some manner.752 As the PAR notes in regard to competition activities, “[b]y using these 

mechanisms to signal its enforcement policies and priorities, the FTC seeks to deter 

would-be violators of the law. . . . The FTC seeks to make its law enforcement presence 

visible and its enforcement policies transparent in order to serve its objectives through 

 

746 See Wickelgren, Chicago Tr. at 262. See also Ind. Fed’n of Dentists v. FTC, 476 U.S. 447 (1986) 

(involving quick-look application of the rule of reason to dentists’ agreement to withhold X rays from 

insurers); S.C. State Bd. of Dentistry, 138 F.T.C. 229 (2004), appeal dismissed, 455 F.3d 436 (4th Cir. 

2006) (involving rejection of state action immunity for regulation that prohibited hygienists from 

performing certain services in school settings in the absence of dentist involvement). 

747 See Wright, Chicago Tr. at 189-90. 

748 Elhauge, Boston Tr. at 43. See also Temple Lang, Brussels Tr. at 106. 

749 See Wickelgren, Chicago Tr. at 262; Wright, Chicago Tr. at 135-36. 

750 FTC PAR, supra note 719, at 33. 

751 Id. at 49-50 (BCP); id. at 74-77 (BC). 

752 A large portion of consumer protection media is aimed at consumers in an effort to better educate them 

in ways to avoid fraud and deception. Although consumer education surely reduces harm to consumers, 

only the media mentions of enforcement actions or that otherwise signal the FTC’s enforcement posture are 

likely to have a deterring effect. 

158
deterrence.”753 Following is a discussion of some possible direct and indirect means for 

measuring the extent to which FTC enforcement actions deter unlawful behavior as well 

as for measuring whether current levels of deterrence are appropriate. 

Direct Measurement of Deterrence. Ideally, the deterrent effects of Commission 

actions (as a proxy for welfare effects of those actions) would themselves be measured 

directly. However, as with the direct measurement of welfare effects, direct 

measurement of deterrent effects is necessarily difficult because it entails measuring 

conduct that did not happen.754 Some outside academics and FTC staff, however, have 

conducted several studies that attempt to measure the general deterrence effects of the 

Commission’s advertising substantiation and fraud programs. The methods and results of 

these studies may be instructive for other attempts to measure (directly or through 

proxies) the welfare effects of FTC actions. 

BCP staff also has attempted to assess the Commission’s general deterrent impact 

in one area of fraudulent activity: deceptive weight-loss claims. Staff compared the 

frequency and content of weight-loss advertising in a sample of magazines published in 

both 2001 and 1992. Although the Commission brought more than 80 cases during this 

time period, the quantity of weight-loss claims doubled, and claims were much more 

likely to contain unsupported promises of rapid, dramatic, and permanent weight loss. 

Staff concluded that the Commission’s prior actions, primarily law enforcement actions, 

were not sufficient to deter deceptive weight-loss claims (and it urged the media to 

monitor advertisements for blatantly deceptive “red flag” claims).755

 Additionally, stock market information can be used to measure directly the 

deterrent power of an FTC advertising enforcement action against a publicly traded 

company. Stock market “event” studies compare the movement in the stock price of an 

FTC defendant – before and after the announcement of a complaint, consent agreement, 

or final litigated order – with movements in a portfolio of stocks with similar risk over 

the same time period. This methodology attributes systematic differences in the 

performance of the target company’s stock value vis-à-vis the benchmark portfolio to the 

impact of the FTC action on company good will and the effectiveness of its future 

advertising. In this manner, these event studies test whether a Commission action affects 

the cost of engaging in deceptive advertising, and hence the deterrent power of FTC 

enforcement. 

The first study examined the stock behavior of 23 companies that were the targets 

of FTC deceptive advertising complaints (either litigated or settled by consent) from 1962 

to 1975, and it found a three percent mean loss in stock value associated with the 

 

753 Id. at 74. The same would apply to consumer protection activities as well, including enforcement and 

business education literature. 

754 See supra Chapter VII.A; see also Padilla, Brussels Tr. at 80-81; Temple Lang, Brussels Tr. at 77-78. 

755 FTC STAFF, WEIGHT-LOSS ADVERTISING: AN ANALYSIS OF CURRENT TRENDS 28-30 (2002), available 

at http://www.ftc.gov/bcp/reports/weightloss.pdf. See supra Chapter VI.B.10 for a discussion of the Red 

Flag project. 

159
announcement of an FTC complaint.756 Two subsequent event studies found similar 

results.757 Despite a general assumption that FTC administrative cease and desist orders 

provided little, if any, deterrent impact because they provided firms with a penalty-free 

“first bite of the apple,”758 the size of the effect on the stock suggests that stockholders 

take an FTC order very seriously and that publicity surrounding the order, or perhaps the 

possibility of future monetary penalties for order violations, was expected to affect future 

consumer purchase behavior. Thus, these studies suggest that FTC advertising 

enforcement is likely to have a strong deterrent effect. 

 At least one study also tested the hypothesis that the FTC’s “reasonable basis 

doctrine” for advertising substantiation, which the Commission enunciated in its Pfizer

decision,759 deterred both harmful and beneficial advertising. The ultimate goal of the 

reasonable basis doctrine articulated in Pfizer is to raise the credibility that consumers 

can attach to objective claims in advertising without imposing evidentiary burdens that 

discourage the dissemination of useful information. If the ad substantiation program 

works as intended, firms that possess a reasonable basis for performance claims will find 

advertising a more productive mechanism to increase sales. Thus, a correctly set 

substantiation standard may lead to more advertising. Alternatively, if the FTC has set 

the substantiation requirements too high, informative advertising may decrease overall. 

The study provides a direct test of the extent to which the Pfizer decision deterred 

beneficial advertising, by examining advertising intensity (advertising outlays as a 

percent of product sales) in all media before and after Pfizer for 20 firms selling “search” 

or “inexpensive experience” goods and 18 firms selling “credence” or “expensive 

experience” goods.760 The authors found that, following the introduction of the ad 

 

756 Sam Peltzman, The Effects of FTC Advertising Regulation, 24 J.L. & ECON. 403 (1981). The author 

describes the magnitude of this impact as “astounding” given that advertising for the relevant product was 

at most only one percent of total company sales. Peltzman concludes: “The story the stock market appears 

to be telling is that an FTC complaint implies essentially a wiping out of the brand’s advertising capital.” 

Id. at 418. 

757 Sauer and Leffler examined the stock market performance of 31 firms that were the targets of ad 

substantiation cases between 1972 and 1985 and again found that a 3 percent decline in stock value 

followed announcement of an FTC complaint. Raymond D. Sauer & Keith B. Leffler, Did the Federal 

Trade Commission’s Advertising Substantiation Program Promote More Credible Advertising?, 80 AM.

ECON. REV. 191, 192 n.5 (1990). Mathios and Plummer examined 122 advertising cases brought by the 

Commission between 1963 and 1985. Stock market losses ranged from 2.5 percent for negotiated consent 

agreements to a cumulative loss of 3.2 percent for litigated cases. FTC BUREAU OF ECONOMICS STAFF,

ALAN MATHIOS & MARK PLUMMER, REGULATION OF ADVERTISING: CAPITAL MARKET EFFECTS 37-40 

(1988), available at http://www.ftc.gov/be/consumerbehavior/docs/reports/MathiosPlummer88.pdf. In 

contrast, the authors found much smaller or no losses for firms that were the subject of decisions under the 

self-regulatory program established by the Council of Better Business Bureaus or that were the result of 

private actions brought under the Lanham Act. Id.

758 See 1969 ABA REPORT, supra note 152, at 41. 

759 Pfizer Inc., 81 F.T.C. 23 (1972). 

760 Any increase in advertising credibility from ad substantiation requirements should favor claims that 

consumers cannot easily evaluate for themselves, either by prepurchase inspection (in the case of so-called 

“search” goods) or, for inexpensive products, by postpurchase experience (“inexpensive experience” 

products). Presumably, market forces would police the truthfulness of claims that readily can be evaluated 

160
substantiation program, advertising intensity for the 18 firms in the latter category 

increased significantly relative to the 20 firms in the former category.761 The study also 

gauged the impact of Pfizer on entry by new firms; because advertising is of particular 

value for new products, heavy substantiation burdens could impede entry and slow the 

growth of new entrants. The authors examined sales data for all new products entering 

the over-the-counter drug market during the 1967-69 and 1973-75 periods and found that 

new entrants grew faster and attained their mature sales level faster in the post-Pfizer

period.762 This result provides a direct measurement of enforcement effects and suggests 

not only that Pfizer increased advertising credibility, but that it did so without a 

disproportionate increase in substantiation costs. 763 

Although these studies have some obvious limitations, the results have been 

interesting and even striking, often running counter to the expectations of the 

investigators. Further, although acquiring data and identifying the proper benchmark can 

be difficult, these studies may provide templates for direct measurement of the deterrent 

effect of other FTC programs. 

Indirect Measurement of Deterrence. Panelists observed that the deterrent effect 

of enforcement actions often is seen most vividly in the course of counseling clients,764

and other agencies have pursued additional, indirect methods of measuring deterrence. 

One possibility is through survey data. In this vein, the OFT engaged an outside 

consultant to survey senior U.K. competition lawyers on how many clients abandoned or 

changed initiatives due to concerns about OFT investigations.765 The survey revealed 

 by consumers, as there would be little gain from making a fraudulent claim that consumers could detect 

almost immediately. In those situations, presumably, sellers would either make accurate claims about 

objective characteristics or engage in “puff” advertising intended to grab consumer attention. As a result, 

the introduction of the ad substantiation program in 1972 might have had little impact on advertising 

content or intensity for those products. The opposite would be true for products that are expensive and 

infrequently purchased, or for “credence goods” with performance characteristics that consumers cannot 

evaluate easily through experience. In such cases, consumers might rely heavily on credible performance 

claims, and a perception by consumers that such claims have become more credible could encourage firms 

to advertise more heavily. 

761 Sauer & Leffler, supra note 757, at 193. 

762 Id. at 198. 

763 It could be fruitful to use whatever historical data are available on advertising content and expenditures, 

by media and product category, to determine whether there have been any significant changes in the impact 

of the Commission’s ad substantiation program over the past two decades. Specifically, questions for 

analysis might include the following: (1) Is there any indication that advertising credibility has suffered 

over the past 20 years? (2) Have there been any shifts in advertising intensity by type of product? (3) Has 

there been any reduction in the use of objective performance claims in national advertising? (4) Is it 

feasible to study the practical effects of particular Commission cases in recent years (analogous to the 

merger retrospectives performed in the antitrust field)? and (5) Could such analysis yield useful qualitative 

information on how firms respond to specific advertising substantiation and disclosure requirements? 

764 See, e.g., McDavid, 7/30 DC Tr. at 52-53. 

765 See DELOITTE & TOUCHE LLP, THE DETERRENT EFFECT OF COMPETITION ENFORCEMENT BY THE OFT:

A REPORT PREPARED FOR THE OFT BY DELOITTE (2007), available at

http://www.oft.gov.uk/shared_oft/reports/Evaluating-OFTs-work/oft962.pdf. 

161
that many companies had altered or abandoned mergers or other conduct because of the 

concern about possible OFT action. The study concluded that for each merger 

enforcement action, another merger was deterred.766 For nonmerger conduct, such as 

cartel activity and abuses of dominance, the study concluded the ratio was four-to-one or 

higher.767 The study has its limits, however. As it notes, the deterrence figures it 

provides were generally lower bounds because of self-policing that prevents companies 

from reaching a point at which it becomes appropriate to consult with counsel about the 

potential illegality of particular conduct.768 The sample size was small, meaning the data 

might have significant limitations.769 Further, the benefits of the deterrent effect of 

agency actions obviously depend on whether the underlying actions were themselves 

beneficial – yet another reason for agencies to undertake ex post evaluations and test the 

benefits of the underlying actions. 

 The Australian Competition and Consumer Commission also has employed 

survey data to measure the extent to which its antitrust laws deter illegal conduct.770 The 

data collection was divided into two groups: qualitative interviews and quantitative 

responses. The ACCC interviewed 39 current and former staff of the ACCC to establish 

ways in which businesses reacted to ACCC enforcement activity and its impact on 

business compliance. It also collected survey responses from 999 Australian businesses 

(with a 43-percent response rate) across all industries, filled out by the most senior person 

responsible for trade practice compliance. The survey revealed that larger businesses 

exhibited more of the characteristics associated with a higher degree of compliance as 

they have a greater capacity to comply, feel vulnerable to regulatory enforcement, and are 

more likely to have had past ACCC interactions. Deterrence levels varied little by 

industry, with the primary agricultural industries having the lowest levels of compliance. 

Those with past ACCC interaction saw the cost of compliance as outweighing 

compliance gains, were more aware of their Trade Practices Act (“TPA”) obligations, and 

were more likely to rate themselves as higher on their compliance and compliance 

management activity. Those who admitted TPA breaches perceived the gain of 

noncompliance as greater than the costs, even if these actions were investigated by the 

ACCC. 

One panelist suggested additional indirect indicators that competition enforcement 

is having a deterrent effect. For example, the money that companies spend on 

compliance programs, the size of law firms’ antitrust groups, and the number of business 

schools that offer programs in antitrust likely are correlated with a deterrent effect on 

business.771 On the consumer protection side, some roundtable panelists suggested that 

 

766 Id. at 6-7. 

767 Id. at 8. 

768 Id. at 6, 17. 

769 Id. at 11. 

770 See VIBEKE LEHMANN NIELSEN & CHRISTINE PARKER, THE ACCC ENFORCEMENT AND COMPLIANCE 

SURVEY: REPORT OF PRELIMINARY FINDINGS (2005), available at

http://cccp.anu.edu.au/projects/CCCPReport%20Final.pdf. 

771 Bavasso, Brussels Tr. at 81-82. 

162
the level of consumer complaints could act as a proxy for the level of deterrence.772 For 

example, observing a downward trend in certain types of complaints in the Consumer 

Sentinel database following an FTC enforcement action or education campaign may 

provide some evidence of a deterrent effect. One must be careful about inferring a causal 

relationship from such trends, however, because complaints are likely to have a selfreporting bias.773 Further, as discussed above in the context of merger retrospectives, it 

may be difficult to identify a proper benchmark level of complaints with which to 

compare the number of observed complaints.774

c. Direct Impact from Enforcement Actions 

As noted above, panelists generally agreed that deterrence should be the primary 

goal of enforcement, but it is also clear that stopping conduct that is causing immediate 

harm to consumers is welfare-enhancing. Thus, focusing on cases with large consumer 

harm is likely to be beneficial to consumers, thus furthering the FTC’s mission.775 For 

example, several panelists explained that emphasis on enforcement in large sectors of the 

economy, like supermarkets, health care, and petroleum markets, is appropriate because 

of the large role these industries play in consumers’ lives.776 Bringing large cases (which 

is correlated to certain PAR measurements777) also can enhance the reputation of the 

agency, providing, for example, enhanced leverage in negotiations with other parties.778 

The EC’s Directorate General for Competition focuses primarily on cases with 

large consumer harm.779 This focus, however, is in part due to the very limited private 

rights of action in the EU; because private individuals cannot vindicate their own rights, 

they rely on DG Comp to bring suit to stop the conduct at issue.780 Given the vibrant 

market for private litigation in the U.S., however, consumer redress may not be as 

important a metric for evaluating the success of the FTC.781 The marginal impact of an 

 

772 See Cerasale, NY Tr. at 190-91; Feigenbaum, NY Tr. at 191. 

773 See Greisman, NY Tr. at 211-12. 

774 See supra notes 699-710 and accompanying text for a general discussion of difficulties in constructing a 

hypothetical benchmark. The OFT recently issued a report that looked at whether the complaints lodged in 

their Consumer Direct database are truly representative of the universe of complaints that consumers have. 

The report concluded that the database was largely accurate in identifying the biggest areas of consumer 

harm. Consultation with OFT, Sept. 11, 2008. 

775 See, e.g., Wickelgren, Chicago Tr. at 261-62; Shapiro, Chicago Tr. at 263-64. 

776 See, e.g., Campbell, Chicago Tr. at 136; Drauz, Brussels Tr. at 14; Temple Lang, Brussels Tr. at 63. 

777 PAR measure 2.2.3 provides: “Take action against mergers likely to harm competition in markets with 

a total of at least $125 billion in sales over a five-year period, $25 billion in sales each year.” Measure 

2.2.5 provides: “Take action against anticompetitive conduct in markets with a total of at least $40 billion 

in annual sales over a five-year period, $8 billion each year.” FTC PAR, supra note 719, at 39. 

778 See Shapiro, Chicago Tr. at 263-64. 

779 Consultation with DG Comp, Oct. 21, 2008. 

780 Id.

781 See, e.g., Heimler, Paris Tr. at 135 (explaining that the existence of private litigation gives the FTC the 

luxury of being more selective in the types of cases it takes). 

163
FTC action in a case that implicates a large amount of consumer harm may be small to 

the extent that there are already strong private incentives to bring antitrust or consumer 

protection actions. As one panelist noted, when the FTC selects cases, it should prefer 

“doctrine rather than dollars because if there are a lot of dollars, probably private 

plaintiffs are going to be ready to do it.”782 If the harm from conduct that would violate 

antitrust or consumer protection laws accrues to one or a small number of parties, there 

may be sufficient incentives for private parties to bring legal action. When a large 

amount of harm is dispersed over a large number of consumers, however, it may not 

make financial sense for any single consumer to bring an action, and class actions may be 

an insufficient tool to vindicate consumer harm.783 This situation may be especially 

likely to obtain with respect to consumer protection enforcement.784 

Currently, the PAR reports an estimate of the savings accruing to consumers from 

both competition and consumer protection actions.785 Although the estimated monetary 

value of harm to consumers that is avoided due to FTC enforcement – necessarily a rough 

estimate in light of all the issues discussed above – represents an increase in consumer 

welfare, it does not capture deterrence or precedential effects. Additionally, it does not 

capture the relative efficiency of the enforcement effort. As discussed above, if a private 

party (or perhaps a self-regulatory body) were likely to bring a comparable challenge to 

the conduct in question, agency resources may be better invested elsewhere. 

d. Precedent 

Another benefit of enforcement actions identified by panelists is that they provide 

guidance and precedent on legal doctrine and the agency’s enforcement approaches.786 

 

782 Angland, NY Tr. at 64. 

783 See Timothy J. Muris, The Federal Trade Commission and the Future Development of U.S. Consumer 

Protection Policy, Remarks at the Aspen Summit, at 3 (Aug. 19, 2003), available at

http://www.ftc.gov/speeches/muris/030819aspen.shtm. 

784 Id. at 4. 

785 The savings to consumers are based on estimates from staff of the value of goods and services that 

otherwise would not have been sold due to fraud or deception in the case of consumer protection 

enforcement and, in the case of competition enforcement, the likely price increases in relevant markets had 

the conduct been allowed to continue. See FTC PAR, supra note 719, at 47 (BCP); id. at 70-71 (BC).

The OFT uses a similar methodology to estimate the consumer savings from the direct impact of its 

competition and consumer protection enforcement programs. See U.K. OFFICE OF FAIR TRADING, POSITIVE 

IMPACT 07/08: CONSUMER BENEFITS FROM COMPETITION ENFORCEMENT, MERGER CONTROL, MARKET 

STUDIES AND MARKET INVESTIGATION REFERENCES, AND SCAM BUSTING (2008), available at

http://www.oft.gov.uk/shared_oft/reports/Evaluating-OFTs-work/oft1007.pdf. To estimate the impact of 

blocking some mergers, the OFT employs a merger simulation to estimate equilibrium prices and output 

had the blocked merger occurred. Id. at 18. For nonsimulated mergers, it estimates the consumer savings 

as a weighted average of simulated savings multiplied by the size of the relevant market. Id. at 20-21. To 

estimate the impact of actions that stop anticompetitive conduct, the OFT multiplies the actual or estimated 

price increase from the conduct by the size of the market, then estimates the likely duration of the conduct 

absent OFT intervention. The cost of the estimated future harm is discounted to present value. Id. at 26-

28. The OFT uses a similar methodology to estimate savings from its “Scambusters” team. Id. at 14-15. 

786 See, e.g., McDavid, 7/30 DC Tr. at 54. 

164
Cases involving unsettled areas of law are likely to be more risky, and thus associated 

with lower win rates, but can have large payoffs if they move the law in a direction that 

enhances competition. Former Chairman Timothy Muris, for example, touched on the 

Commission’s experience in bringing state action and Noerr-Pennington cases, which 

implicate state-imposed restrictions on competition. Specifically, he pointed to staff’s 

understandable reluctance to bring the Unocal case because it has “Noerr problems,” but 

explained that “[e]veryone across the antitrust spectrum agrees [that state action and 

Noerr-Pennington cases] are good cases.”787 Although such exemption cases may be 

more difficult to win than those involving purely private conduct, given the size of likely 

welfare losses from state-imposed restraints on competition, it is likely that pushing the 

law in a direction that makes obtaining and imposing state restraints on competition more 

difficult is likely to provide consumers with significant welfare gains.788 Further, 

valuable cases may be brought when direct consumer redress is relatively small. For 

example, the Three Tenors decision laid out a flexible approach to the rule of reason, 

which the D.C. Circuit ultimately affirmed.789 

One panelist, however, cautioned that the precedential value of many FTC 

decisions and prosecutions is limited where they are resolved through consent decrees, 

rather than litigated cases.790 Particularly in cases where parties are anxious to avoid 

litigation, consents may contain theories that would not succeed if litigated.791 

Court decisions that clarify a murky area of law are valuable to businesses in the 

form of increased predictability.792 Accordingly, even an FTC loss that provides clarity 

to the business community in an unsettled area of law likely provides a benefit.793 As 

one panelist noted with respect to the FTC’s standard-setting and Hatch-Waxman cases, 

“It was very important to know what the courts think about them. That is really a service 

to consumers and business as well.”794 Further, if important precedential cases do no

involve large markets, there may be little incentive for private enforcement to move the 

t 

 

787 Muris, 7/29 DC Tr. at 42 (referring to Union Oil Co. of Cal., FTC Dkt. No. 9305); see also id. (“I 

understand . . . the reluctance of the staff lawyers to go into these exception issues. But why other people 

in the leadership refrain from going there is a mystery . . . .”). 

788 See Susan A. Creighton et al., Cheap Exclusion, 72 ANTITRUST L.J. 975, 994-95 (2005). 

789 See Polygram Holding, Inc., 136 F.T.C. 310 (2003), aff’d, Polygram Holding, Inc. v. FTC, 416 F.3d 29 

(D.C. Cir. 2005). 

790 See Campbell, Chicago Tr. at 118-19. Another panelist noted that private cases and those brought by 

the Department of Justice also are usually resolved by settlement or consent decree. Harrop, Chicago Tr. at 

119-20. 

791 See Campbell, Chicago Tr. at 128. See also supra Chapter VI.B.1.

792 See Drauz, Brussels Tr. at 12 (noting that setting precedent for the purposes of enhancing predictability 

provides important benefits). 

793 See Vickers, London Tr. at 16-17. 

794 Boast, NY Tr. at 53. 

165
law in the correct direction.795 Thus, FTC action may be necessary to effect the desired 

improvement in consumer welfare. 

 Currently, the PAR does not attempt to measure the benefits from establishing 

better or at least clearer legal rules. Nor did panelists offer any possible metrics. To 

measure the welfare effects from changes in legal rules directly likely would require 

methods similar to those used to measure the change in firms’ advertising after the Pfizer

decision.796 

2. Intellectual Leadership 

 Intellectual leadership broadly refers to the FTC playing a leading role in shaping 

sound competition and consumer protection policy. The FTC’s role as an intellectual 

leader in competition policy can be traced back to its origins. Congress intended the FTC 

to guide the courts and the business community at large about what the antitrust laws 

prohibit and allow, and, to fulfill this mandate, it provided the FTC with broad 

investigatory powers and intended the Commission to be populated with expert attorneys 

and economists.797 As one panelist noted, the FTC is “part of the think-tank of antitrust 

and competition policy.”798 

Thus, one desirable quality of FTC output is that it demonstrates intellectual 

leadership,799 and it can do so in various ways. Commission adjudicative decisions can 

provide leadership in developing antitrust and consumer protection jurisprudence.800 The 

agency can focus attention on new threats to consumers and ways to approach them. For 

example, although not met with universal success, the FTC’s cases involving competition 

in the pharmaceutical industry demonstrated to policymakers that the type of conduct at 

 

795 But see Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (upholding finding of price fixing against 

bar associations that published and enforced minimum-fee schedule and declining to create exemption from 

the antitrust laws for a “learned profession”). 

796 See supra Chapter VII.B.1.b. 

797 See Kovacic, Quality, supra note 72, at 919-20. 

798 McDavid, 7/30 DC Tr. at 115. 

799 There was considerable debate at the international consultations about whether the U.S. was “losing” 

influence to Europe. For example, a number of panelists talked about the growth in competition laws based 

on the European model, attributed in large part to the exportability of its entire legal framework and the 

ease of transplanting an administrative system. The area in which the U.S. agencies’ influence was viewed 

as strongest, however, was in intellectual innovation, including, for example, the use of economics and 

analysis of competitive effects. William Bishop explained: “Where the US has continued to succeed and 

continued to have enormous influence is that it is the source of nearly all the intellectual innovation in the 

area. If we think of what has happened in the last few years the shift towards economics-based antitrust 

that is now taken for granted everywhere began in the United States and was first put into practice in the 

United States. Leniency programs, clarifications of unilateral effects versus coordinated effects, use of 

simulations in merger and other contexts and nearly all quantitative effects. Nearly everything has come 

from the United States.” Bishop, London Tr. at 153. 

800 For example, as noted in the previous section, the Three Tenors decision laid out a flexible approach to 

the rule of reason. See supra note 789. 

166
issue in these cases deserved close antitrust scrutiny.801 Several panelists also expressed 

support for the FTC’s recent work in identifying and addressing privacy issues,802 and, 

more broadly, panelists suggested that the FTC has demonstrated leadership through its 

market-based approach to consumer protection enforcement.803 As discussed in Chapter 

V.C, research is necessary for intellectual leadership, both internally to guide FTC 

enforcement decisions in a direction that is likely to improve consumer welfare,804 and 

externally for the FTC to use to educate policymakers and courts.805 As discussed in 

Chapter VI, the FTC also can exert intellectual leadership through guidelines, advocacy, 

speeches, and other domestic and international outreach that inform the relevant external 

constituencies about the FTC’s current thinking in certain areas.806 

A final tool with which to exercise intellectual leadership is the education of 

policymakers and consumers about the value of competition. For example, former OPP 

Director Susan DeSanti explained that in her experience the public and Congress often 

look at competition in terms of “whether things are fair or not,” rather than understanding 

the “value of competition in terms of growing the economy, lowering prices, producing 

innovation, [and] improving quality.”807 She noted that, “if there is an agency that has a 

mandate that would include education [on the importance of competition], it is this 

agency.”808 In this context, consumer education and formal or informal advocacy 

demonstrates leadership when it provides consumers and policymakers with answers that 

may be unpopular, but ultimately are in the best interest of consumers. For example, 

although proposals aimed at perceived price gouging in the oil and gas industry have 

been considered by Congress in the past, through reports and congressional testimony, 

the FTC consistently has demonstrated leadership by advocating against such measures 

because they ultimately are bad for consumers.809 Further, by carefully explaining to 

 

801 See Boast, NY Tr. at 33-34, 53; Angland, NY Tr. at 64-65; Parker, 7/29 DC Tr. at 118; Baer, 7/29 DC 

Tr. at 118-19; Creighton, 7/29 DC Tr. at 119; Heimler, Paris Tr. at 98; Stoffel, Paris Tr. at 126; Jansen, 

Paris Tr. at 137. 

802 See Peeler, 7/30 DC Tr. at 161; Swire, NY Tr. at 180, 204; Feigenbaum, NY Tr. at 214. 

803 See Peeler 7/30 DC Tr. at 133-34. One panelist contended that the FTC needs to play a leadership role 

in creating greater uniformity in enforcement of state consumer protection laws. See Butler, Chicago Tr. at 

19-20, 57-58. 

804 Of course, there may be tensions between litigating cases and conducting research that could undermine 

those cases. See Salinger, 7/29 DC Tr. at 157-58 (discussing how research on grocery store mergers or 

petroleum markets may affect enforcement in these areas). 

805 See, e.g., Creighton, 7/29 DC Tr. at 116-17; Kattan, 7/29 DC Tr. at 140-41. 

806 See, e.g., Boast, NY Tr. at 33-34. 

807 DeSanti, 7/29 DC Tr. at 162. 

808 Id. at 162-63. 

809 See Leary, 7/29 DC Tr. at 27-28 (“[T]he role that the Federal Trade Commission – the lonely role that 

the Federal Trade Commission has played in recent years, in urging Congress not to do something stupid, 

like control the prices of gasoline, is a very proud moment.”); see also FTC POST-KATRINA REPORT, supra

note 202; FTC, GASOLINE PRICE CHANGES: THE DYNAMIC OF SUPPLY, DEMAND, AND COMPETITION

(2005), available at http://www.ftc.gov/reports/gasprices05/050705gaspricesrpt.pdf. 

167
consumers and other external constituents the rationale behind certain FTC actions, the 

FTC can maintain support for its mission.810 

 Although any measure of intellectual leadership necessarily will be subjective, 

several proxies for leadership lend themselves to objective measurement. Currently, in 

its PAR, the FTC measures (1) the number of workshops or hearings it holds,811 (2) the 

number of reports and advocacy filings it issues,812 (3) the number of amicus briefs it 

files,813 and (4) the number of consultations with foreign authorities.814 These measures, 

however, are all focused on FTC output rather than outcomes.815 

Panelists suggested some additional outcome-oriented measures for intellectual 

leadership. For example, the influence of research and competition advocacy can be 

measured by examining the extent to which these outputs have affected outcomes.816 

Further, the extent to which courts adopt FTC legal theories likely is a useful proxy for 

FTC leadership in antitrust and consumer protection enforcement. FTC research cited in 

court decisions or other scholarly work likely is a reflection of the degree to which this 

output has had a positive effect on consumers.817 These metrics could be used to 

determine whether there are problems in the process for developing policy R&D projects, 

such as producing too few or focusing on the wrong issues. 

In evaluating the FTC’s work in the international arena, consultation participants 

proposed a variety of specific indicators for measuring success, including, among others, 

the quality of contributions to multinational fora (as well as the dissemination of other 

agencies’ contributions to such fora throughout the FTC),818 the quality and quantity of 

 

810 See Venit, Brussels Tr. at 30 (“I think one practical thing may be to begin your educational policy not 

directed at the [populace] at large, but directed at the politicians themselves, the lawmakers, and try and 

educate them [as to] the complexities of the problems, what the agency’s mission is and why it may not be 

able to respond to certain [populace] demands and try and deal with it at that level.”). 

811 FTC PAR, supra note 719, at 54 (BCP); id. at 79 (BC). 

812 Id. at 55 (BCP); id. at 80 (BC). 

813 Id. at 55 (BCP); id. at 81 (BC). 

814 Id. at 56 (BCP); id. at 83 (BC). This measure focuses on cases in which the FTC cooperated with 

foreign authorities, consultations or comments filed with foreign authorities, written submissions to 

international fora, international events attended, and leadership positions in international competition 

organizations held by FTC staff. 

815 See, e.g., Calkins, 7/30 DC Tr. at 72 (arguing that measurement of number of competition advocacies is 

not a particularly good means to determine their effect on consumers). 

816 See id. at 117-18. 

817 See id.; Ennis, Paris Tr. at 128; Greene, Boston Tr. at 47. 

818 Consultation with the Israeli Antitrust Authority, Aug. 19, 2008. Members of the Israeli Antitrust 

Authority stated that their agency’s international efforts are strengthened by the willingness to involve staff 

from outside of the international department in international discussions and by the dissemination of 

information from the international meetings across the agency. In the area of contributions to multilateral 

fora, there was a recommendation that, to get more substantive contributions, agencies’ delegations include 

more staff who are working on cases. See Reindl, NY Tr. at 104-05. 

168
cooperation received on specific cases,819 and the willingness of the agency to consult 

private sector actors and academics in creating best practices.820

One panelist also noted that one can measure the extent to which competition 

advocacy has influenced policy outcomes in directions favored by the FTC through 

surveys.821 One study that attempted to assess the FTC advocacy program’s impact on 

regulatory outcomes from 1985 to 1987 found that 39 percent of comment recipients 

reported that the comments were at least “moderately effective,” meaning that “the 

governmental entity’s actions were totally or in large part consistent with at least some of 

the FTC recommendations, and that any action taken was largely or partly because of 

those recommendations.”822 The author concedes, however, that this “does not establish 

that the FTC effect on those decisions improved them; that is what cannot be 

measured.”823 

A more recent survey concerning advocacy filings from 2001 to 2006 by the 

FTC’s Office of Policy Planning sought to improve on the methodology employed in the 

1985-1987 survey. For example, the survey solicited input not only from the advocacy 

requestor but also others involved in the decision-making process, including those 

opposed to the position articulated in the FTC advocacy. Further, the survey included 

questions designed to assess the extent to which the FTC affected the outcome of the 

legislative or regulatory process. This survey found that 53 percent of respondents 

agreed that the outcome of the regulatory process was largely consistent with the FTC 

position, 94 percent of respondents said that the FTC comment was considered, and 54 

percent of respondents (and 79 percent of those respondents who had an opinion) 

believed that the FTC comment influenced the outcome. Further, 81 percent of 

respondents answered that the fact that the comment came from the FTC caused them to 

give it more weight than they otherwise would have.824 

 

819 Consultation with ACCC, Oct. 2, 2008. 

820 DC Consultation on International Issues, Nov. 6, 2008; Korsun, NY Tr. at 139. The FTC was 

commended by one roundtable panelist for its work with nongovernmental advisors. See Blechman, NY 

Tr. at 136. 

821 See Ellig, 7/30 DC Tr. at 27-28. In fact, the FTC is considering whether to measure the outcome of 

advocacies as part of future PARs. See FTC PAR, supra note 719, at 34. 

822 Arnold C. Celnicker, The Federal Trade Commission’s Competition and Consumer Advocacy Program, 

33 ST. LOUIS U. L.J. 379, 391 (1989). Another 11 percent of the survey respondents found the comments to 

be “slightly effective,” meaning that “the governmental entity’s actions were to a small degree consistent 

with at least some of the FTC recommendations, and that any action taken was largely or partly because of 

those recommendations.” Id. Additionally, the author found that 47 percent of respondents gave the 

comments “substantial weight because it came from the FTC.” Id. at 392. In 1989, a virtually identical 

survey was sent by the Director of the FTC’s Advocacy Office to recipients of comments dated June 1, 

1987 through June 2, 1989. The responses to this second survey were consistent with those from the first. 

823 Id. at 400. 

824 United States, Note for OECD Roundtable on Evaluation of the Actions and Resources of Competition 

Authorities, at 13-14 (May 25, 2007), available at http://www.ftc.gov/bc/international/docs/evalauth.pdf. 

See also Deborah Platt Majoras, A Dose of Our Own Medicine: Applying a Cost/Benefit Analysis to the 

FTC’s Advocacy Program, Keynote Address, Current Topics in Antitrust Economics and Competition 

Policy, Charles River Associates (Feb. 8, 2005), available at 

169
 

3. Transparency and Guidance to Business and Consumers 

 Several panelists noted that the business community greatly values prospective 

guidance from the Commission on its current enforcement views in the conduct and 

merger areas.825 Providing guidance, moreover, is consistent both with President 

Wilson’s original vision for the agency826 and with the FTC’s “special mission in the 

policy area,”827 which is to act as the preeminent competition and consumer protection 

policy authority.828 This guidance comes not only from formal guidelines and industry 

guides, but also from speeches, advisory opinions, and closing statements, and it can 

reduce total societal costs by allowing businesses to “get it right” in the first instance, 

rather than having to engage with the Commission.829 

As noted in Chapter VI.B.5, notwithstanding criticisms levied against agency 

guidelines, many roundtable participants urged the Commission to produce more formal 

business guidance in the form of guidelines and guides.830 As one panelist put it, the 

“appetite of the private bar for guidance[ and] guidelines is inexhaustible.”831 Others 

generally lauded the Commission’s use in recent years of its complaints and settlement 

agreements to provide information to the business community and other enforcement 

agencies as to why certain practices were violations of the FTC Act.832 As one panelist 

explained: 

The value of the FTC has not just been as catalyst to 

legislative change, advocacy, promoter of removal of 

government restrictions on competition, but also it has just 

made the law work better by bringing cases, clarifying its 

view of the law, getting some wins, occasionally losing – 

but that is all part of the process – but indirectly making it 

 http://www.ftc.gov/speeches/majoras/050208currebttopics.pdf (describing selected advocacy successes and 

comparing substantial benefits to limited costs of advocacy program). 

825 See, e.g., Leary, 7/29 DC Tr. at 13-14; Bernstein, 7/29 DC Tr. at 17; Baer, 7/29 DC Tr. at 85; Bowie, 

7/29 DC Tr. at 86; A. Schwartz, 7/29 DC Tr. at 204-07; Fenton, 7/29 DC Tr. at 220; Greenbaum, NY Tr. at 

182-83. See supra Chapter VI.B.5 for a discussion of some of the principal means by which the FTC 

provides guidance. 

826 See supra text accompanying note 576. 

827 McDavid, 7/30 DC Tr. at 54. 

828 See Kovacic, Quality, supra note 72, at 918 (noting the original Congressional intent that the FTC be the 

preeminent competition policy authority). 

829 See Baer, 7/29 DC Tr. at 85. See also McDavid, 7/30 DC Tr. at 54-55; Bernstein, 7/29 DC Tr. at 17-18. 

830 See, e.g., Cerasale, NY Tr. at 201-02 (suggesting that there be more guidance for small businesses); 

Greenbaum, NY Tr. at 204-05. 

831 Fenton, 7/29 DC Tr. at 220. 

832 See, e.g., Bowie, 7/29 DC Tr. at 86-87. 

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much easier for others, including private parties themselves 

to enforce the law.833

Transparency, or the ability of the outside to look into the FTC’s decision-making 

process and the FTC’s ability to communicate to the public, also promotes the FTC’s 

ability to provide guidance to the business community. A careful explanation of why 

certain FTC actions are in consumers’ interests can provide valuable information to the 

business community and can build external support for these policies.834 As one panelist 

noted, “guidelines are an exercise in agency transparency.”835 A clear understanding of 

how the FTC is likely to treat a transaction or business practice increases predictability, 

which is likely to reduce firms’ costs by making it easier for them to plan for 

compliance.836 It also is likely to economize on agency enforcement resources by 

promoting deterrence and voluntary compliance with the antitrust and consumer 

protection laws.837 

Panelists also observed that transparency in decision making can force agencies to 

produce better outcomes than they otherwise would: “If you’re committed to having to 

explain yourself publicly in any kind of detail, you’re going to do a better job ahead of 

time.”838 Similarly, another panelist observed that an agency may be more careful in its 

analysis of a particular matter if it anticipates issuing a closing statement.839 Further, 

transparency can have the indirect effect of improving policy by allowing a public 

discussion on a complex issue.840 Finally, transparency also can have international 

benefits by providing guidance to foreign competition and consumer protection 

authorities.841

When assessing the FTC, it is appropriate to examine the extent to which its 

actions have provided guidance both to the business community and to fellow 

 

833 Vickers, London Tr. at 16-17. 

834 See Temple Lang, Brussels Tr. at 39-40; Boast, NY Tr. at 33-34. 

835 Campbell, Chicago Tr. at 143. 

836 See Lowe, supra note 689, at 2; see also ABA TRANSITION REPORT, supra note 11, at 8; AMC REPORT, 

supra note 682, at 65. Lowe notes the tradeoff between providing greater predictability and the need to 

deal with each case on its particular facts: “Based on empirical evidence, some structures or conducts have 

almost always produced outcomes which are harmful to competition and consumers. As a result it may be 

possible to establish some clear ex-ante rules which offer a high level of predictability. However, where 

past evidence is mixed, the most that can be done to provide a degree of predictability is to indicate what 

assessment methodology will be used.” Lowe, supra note 689, at 2. 

837 See, e.g., Lowe, supra note 689, at 9 (“Communicating effectively about [DG Comp’s] work has a 

preventive effect. We can explain the law and highlight the penalties for not respecting the law.”). 

838 Heyer, 7/30 DC Tr. at 109-10. See also McDavid, 7/30 DC Tr. at 111; AAI TRANSITION REPORT, supra

note 150, at 210. 

839 See Wright, Chicago Tr. at 130. 

840 See Heyer, 7/30 DC Tr. at 64-68, 109. 

841 See ABA TRANSITION REPORT, supra note 11, at 8. 

171
enforcement agencies and private parties enforcing the antitrust or consumer protection 

laws. Currently, the PAR measures the extent to which the public accesses relevant 

consumer protection and competition information from the FTC’s website.842 Although 

no panelists offered a way to measure transparency, one possible metric would be to 

count the number of FTC outputs (for example, speeches, advisory opinions, and closing 

statements) that provide the external community with an insight into how the FTC arrives 

at its decisions. Although this metric clearly is focused on output rather than outcome, in 

the case of transparency, output and outcome largely merge – the focus of transparency is 

on FTC output. 

 The FTC also provides guidance to consumers to reduce the incidence of fraud 

and deception. This type of consumer protection education is distinct from that related to 

competition. Unlike in the case of antitrust violations, consumers can take actions to 

reduce the probability of becoming a victim of fraud and deception. Thus, targeting 

messages directly to consumers to inform them of these actions can reduce the 

occurrence of fraud and deception. Consumer education has evolved over the past 20 

years from a relatively minor adjunct to the consumer protection program to a major tool 

in addressing consumer protection issues.843 This change reflects the recognition that, in 

some areas, changing consumer behavior may be more effective than bringing 

enforcement actions. For example, the fraudulent practice of “phishing” for financial 

account information becomes less lucrative to the extent that consumers opt not to 

respond to such emails or telephone calls.844 To address the problem of identity theft – 

where the fraud may be a criminal act perpetrated by one individual – the Commission 

has prepared an array of educational materials designed to assist not only the victimized 

consumers, but also the entire network of entities that may play a role in deterring, 

detecting, and defending against the fraud; these include law enforcement agents, 

businesses, and organizations in a position to educate their membership. 

 

Currently, under its PAR the FTC tracks the number of consumer protection 

messages accessed online or in print (both in English and in Spanish) and the number of 

times print media publishes articles referring to FTC consumer protection activities and 

the circulation of the media that publish those articles.845 A more outcome-oriented 

metric that captures the extent to which these materials actually lead to beneficial 

changes in consumer behavior would be preferable, but likely very difficult to implement 

in all cases.846 However, perhaps a few discrete case studies that examine the incidence 

of certain types of fraud or deception – using survey data and data from the Consumer 

Sentinel database – following the implementation of a consumer education program 

could establish the relationship between consumer education and fraud and deception for 

 

842 FTC PAR, supra note 719, at 50-51 (tracking access to consumer and business education concerning 

consumer protection matters); id. at 82 (tracking access to competition-related materials). 

843 See Baker, Chicago Tr. at 60. See also supra Chapter VI.B.6. 

844 See Peeler, 7/30 DC Tr. at 195. 

845 FTC PAR, supra note 719, at 50-51. 

846 See id.

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evaluation purposes. Further, former Commissioner Yao suggested that the FTC could 

evaluate the effectiveness of consumer education through a field examination. 

Specifically, his proposal involved the FTC running a mock false advertisement and then 

introducing a consumer education campaign directed at this specific type of deceptive 

advertising. A reduction in the number of consumer inquiries about the product after the 

education campaign would serve as a measure of its effectiveness.847

4. Burdens on Industry and Timeliness 

 

 As noted earlier in this chapter, the FTC mission calls for it to prevent business 

practices that are anticompetitive or unfair or deceptive without “unduly burdening 

business activity.” Thus, FTC actions also should be assessed by the extent to which they 

saddle industry with unnecessary monetary and time costs. Panelists, for example, 

commented on the burdens that FTC investigations placed on their clients in terms of 

document production.848 Several panelists also addressed the length of time it often takes 

the FTC to conduct an investigation.849 While dilatory tactics by respondents may 

account for some delays in Commission investigations,850 delays at the agency can place 

unreasonable burdens on the business community and can adversely affect the FTC’s 

credibility.851

In addition to the direct costs associated with lengthy investigations, there are 

indirect costs. First, if investigations into whether certain conduct violates Section 5 

linger without resolution (either issuance of a complaint or closing of the investigation), 

the uncertainty is likely to chill what may be procompetitive conduct.852 Second, there 

may be a negative relationship between the quality of work involved in a case and the 

length of the investigation. As one panelist explained, “When things just bog down and 

drag on, the quality of the fact finding and the quality of the legal analysis, I think 

declines as well.”853

 

847 See Yao, Boston Tr. at 126. 

848 See, e.g., Creighton, 7/29 DC Tr. at 96-97, 109; Bowie, 7/29 DC Tr. at 110-11. 

849 See, e.g., Creighton, 7/29 DC Tr. at 94; Bowie, 7/29 DC Tr. at 94-95. 

850 A target of an FTC investigation has an incentive to let such investigation go on indefinitely – 

particularly if the target has reason to believe that the investigation likely will not result in any enforcement 

action on the part of the agency. 

851 See Baer, 7/29 DC Tr. at 91; see also McDavid, 7/30 DC Tr. at 112-13 (explaining that allowing a 

nonmerger investigation to last five years is “certainly not good government”); ABA TRANSITION REPORT, 

supra note 11, at 9-10 (noting the burden associated with long investigations and suggesting that the 

agencies commit to a time line). 

852 See Wright, Chicago Tr. at 190 (“the idea that keeping these investigations open, doesn’t have some sort 

of chilling effect on what could be procompetitive conduct strikes me as not plausible and it’s at least a 

factor that should weigh into these determinations”). 

853 McChesney, Chicago Tr. at 124. This deleterious effect may arise because as cases drag on, there is 

often turnover in staff, which leads to “an awful lot of things [having to be] started over again both on the 

fact-finding side and to the extent that there has been any legal work completed, reviewing that again.” Id. 

173
Although the FTC currently provides no measurement of costs imposed on the 

business community, one possibility suggested by a panelist would be to report estimates 

of the financial burdens of second requests and other investigation demands as well as the 

time spent investigating matters or litigating in Part III.854 As one panelist noted, if the 

FTC were to begin regularly reporting the length of case investigations, it not only would 

apprise the public of the FTC’s performance but also likely would create pressure to 

resolve issues more quickly than they are currently.855 

 

C. Responsiveness to Core Constituencies 

 The FTC has several constituencies; chief among them are Congress, consumers, 

and business. As discussed in Chapter I.C, lack of external support from core 

constituencies can jeopardize the legitimacy of the agency. Part of maintaining 

constituency support involves paying close attention to the views of external stakeholders 

to calibrate the FTC’s approach to protecting consumers and markets. For example, in 

periods when the FTC was unresponsive to congressional and business concerns, it lost 

its ability to operate effectively.856 One panelist also noted the growing importance of 

reliance on networks of government agencies and external stakeholders to “share and be 

involved in activities” to solve problems.857 More generally, the ability of an agency to 

understand the problems that are garnering political attention and to demonstrate that the 

agency is “part of the solution” rather than “part of the problem,” is a key component to 

long-term success.858

Currently, the FTC measures its responsiveness to consumer protection 

complaints in the PAR.859 It also measures the holding of, and substantial participation 

in, workshops that involve both competition and consumer protection issues.860 In a 

broader sense, workshops are a means by which the FTC demonstrates a willingness to 

respond to, and learn from, constituencies about pressing issues. Although there likely is 

no objective measurement of responsiveness to constituencies in most areas, internal 

evaluation of the extent to which the FTC communicates with constituencies also may be 

a useful metric. 

 

854 See Peeler, 7/30 DC Tr. at 137-38. 

855 See Calkins, 7/30 DC Tr. at 113. 

856 See, e.g., WILSON, supra note 16, at 207-08 (explaining that Chairman Pertschuk’s activism in certain 

areas failed in part because it “aroused the opposition of broad segments of the business community”); 

Kovacic, Quality, supra note 72, at 922-23 (explaining that Pertschuk “misjudged the changing political 

character of Congress, which grew increasingly conservative in the late 1970s, as the FTC pursued an 

unprecedented collection of ambitious antitrust and consumer protection measures”). 

857 Breul, 7/30 DC Tr. at 41-42. See also Bernstein, 7/29 DC Tr. at 56-57 (noting that communication and 

consultations with outside constituencies was helpful in anticipating controversies). 

858 See Breul, 7/30 DC Tr. at 34-35. 

859 FTC PAR, supra note 719, at 45. 

860 Id. at 54 (BCP); id. at 79 (BC). 

174
Some panelists raised concerns that constituents do not always demand welfareenhancing action from the FTC. For example, as noted above, some panelists observed 

that neither consumers nor policymakers necessarily fully appreciate the dynamics of, 

and benefits from, competition in complex markets.861 Further, as one panelist noted, 

interest groups “are not representing the interest of consumers generally. They’re 

representing a particular interest.”862 Thus, before taking actions in response to requests 

from interest groups, the FTC must “calibrate[] what its mission is and recognize[] 

whether what is being requested of the Commission is consistent with stopping fraud, 

stopping deception, or stopping unfairness.”863 

Accordingly, taking actions to satisfy the policy demands of constituencies may 

not necessarily provide a good measure of whether the FTC is taking actions that advance 

consumer welfare. Constituencies may ask for outputs that suit their self-interest, which 

does not necessarily correlate to consumers’ interest. Because the FTC cannot operate 

effectively without external constituent support, however, there can sometimes be a 

tension between intellectual leadership – which may require taking positions that are 

unpopular with political overseers and consumers, but are based on agency expertise of 

what is in consumers’ best interest – and responding to the desires of core constituents. 

As one panelist noted, when these circumstances arise, it is essential for a competition 

agency to bring along its constituencies as it acts to ameliorate this tension.864 Part of 

this exercise involves being accessible and willing to entertain a constituency’s particu

policy demand. It does not, however, require acquiescence to every such demand. As 

noted in Chapter I.C, it is important to distinguish between long-term support for the 

agency’s mission – which is necessary – and unanimous support for every agency action 

– which is not.

lar 

 

865 

 

* * * 

 When assessing the characteristics of agency output, the FTC should stay focused 

on how its actions impact consumer welfare. In some instances, welfare changes can be 

measured directly, but in most cases direct measurement will be impractical. 

Consequently, evaluation of FTC actions often will focus on some mixture of output and 

outcome measures to proxy for direct consumer impacts. 

861 See, e.g., DeSanti, 7/29 DC Tr. at 161 (“we operate in a society where the value of competition is not 

well understood”); Salinger, 7/29 DC Tr. at 163 (with regard to gasoline prices, “the public . . . did not 

understand the workings of [a] competitive marketplace and they were writing their congressmen”); Davis, 

7/29 DC Tr. at 175-76 (noting that one of the challenges the FTC faces is educating congressional 

stakeholders on the value of the agency’s competition mission). 

862 MacLeod, 7/30 DC Tr. at 144. 

863 Id. 

864 See Hill, Paris Tr. at 107. See also Venit, Brussels Tr. at 35-37. 

865 See Muris, Principles, supra note 17, at 167 (having support of external constituencies for an agency’s 

mission “does not mean that the agency’s mission must be ‘popular’ or that the constituents must support 

every particular agency action”). 

175
Some proxies, however, have a closer nexus with welfare changes than others. 

The raw number of cases brought is at best a limited metric to evaluate FTC enforcement 

actions. Further, a focus on the number of wins is likely to be similarly uninformative – a 

large number of wins is likely to signal that the Commission is bringing only easy cases 

and that more problematic conduct remains underdeterred; a smaller number of wins 

could mean that the agency was doing a poor job of litigating, but also could mean that 

the agency was bringing challenging cases. Thus, evaluators should pay attention to the 

extent to which the FTC is bringing the proper mix of cases to maximize its positive 

impact on consumer welfare. This mix will include cases in large markets that vindicate 

substantial consumer interests in the short run, but also cases that are likely to have large, 

long-run deterrent and precedential value. Determining the optimal mix of cases to use 

as a benchmark for the actual mix of cases is likely to be somewhat subjective. 

Empirical study of the relationship between FTC enforcement (and other) actions 

and market outcomes may guide this endeavor. For example, evaluating the deterrence 

effects of enforcement actions targeting anticompetitive conduct may yield useful 

information to guide future enforcement efforts. Because consumers can take actions to 

reduce the incidence of fraud and deception, consumer education can be an effective 

adjunct to enforcement in promoting consumer protection. Evaluating the success of 

consumer education in reducing fraud and deception may be difficult in every 

circumstance, but a few carefully designed studies may provide valuable information. 

 FTC actions also should be evaluated to determine whether they demonstrate 

intellectual leadership in the areas of competition and consumer protection policy. 

Commission cases can lead the way in developing legal norms. Further, it is important 

for the FTC to engage in competition and consumer protection policy R&D to calibrate 

the fit between FTC actions and consumer welfare and to inform courts and policymakers 

in their decisions. The extent to which courts, policymakers, and academics follow the 

FTC’s lead in these areas is an important evaluative criterion. Educating the public and 

policymakers on the benefits of competition also is important. Thus, any evaluation 

should measure the extent to which consumers use FTC competition-promoting materials 

and the extent to which FTC advocacy influences policy outcomes. 

The external community values guidance from the FTC, and the agency should 

strive to make decisions more transparent to improve policy determinations. Any 

evaluation of FTC actions should ask, for example, whether the FTC adequately 

publicizes its actions and whether it effectively conveys policy norms to industry and the 

courts. 

 

Evaluations of FTC output also should measure the extent to which FTC actions 

place unreasonable costs on the business community, both in terms of money and time. 

Such measurement will inform Congress, industry, and the public and also likely will 

enhance internal incentives to reduce burdens the FTC places on businesses. When 

developing a metric, it is important to develop appropriate benchmarks for both financial 

and time burdens, which are likely to vary by action. Potential timeliness metrics might 

176
focus on the appropriate time to process investigations or from filing an administrative 

complaint until a final Commission decision. 

Finally, being open and responsive to core constituencies’ concerns is crucial. 

Absent external support for its mission over time, the FTC cannot operate effectively. At 

the same time, it is important to distinguish between cultivating external support for the 

mission by demonstrating a willingness to take seriously constituency concerns, and 

attempting to garner unanimous support for every agency action. Further, the agency 

should be cognizant of the potential tension between intellectual leadership and 

responsiveness to constituency demands. When these circumstances arise, the FTC can 

ameliorate this tension by engaging in outreach to develop support from its constituencies 

for its policies. 

Answering the fundamental question of how to determine whether the FTC is 

successful requires understanding the agency’s mission, the tools it can employ, how it 

uses those tools, and how it should measure success. Measurements and metrics are 

useful and should be carefully designed and routinely applied. It is also important to 

recognize, however, the intangible nature of the perception of success. As one roundtable 

panelist offered, “[W]hen you are trying to estimate how well you are doing, there are 

things that count that can’t be counted and there are things that you can count that don’t 

count.”866 This project’s deep inquiry into how the agency should examine itself and its 

actions is meant to identify and examine the quantifiable and the intangible 

characteristics of success and serve as a guide for the FTC as it approaches its one 

hundredth anniversary in 2014. 

 

866 Marsden, London Tr. at 121. 

177
PART 4: CHAIRMAN’S RECOMMENDATIONS

 Based on the preceding discussion of the institutional arrangements by which the 

Commission performs its responsibilities (in Chapters I-VI), as well as the means for 

measuring the effectiveness of the agency’s performance (in Chapter VII), following are 

recommendations for consideration by future leaders of the Federal Trade Commission. 

These proposals are offered with the expectation that many measures will require 

continuing effort over a number of years. A larger objective is to build a cultural norm 

that sustains regular, substantial investments in long-term agency capacity. In all of the 

matters addressed below, the FTC should use a combination of self-study, consultation 

with external organizations, and benchmarking with other competition authorities. 

Mission 

With internal and external constituencies, the FTC should continue to build a 

consensus that the core purpose of the agency is to promote the well-being of consumers. 

The Commission should assess each proposed initiative by its capacity, among other 

ends, to improve the range of goods and services available to consumers and to 

strengthen the capacity of consumers to make well-informed choices among those 

alternatives. 

In its Annual Report and in other statements, the Commission regularly should 

state its goals and the means with which it intends to achieve such goals. Where possible, 

the Commission should define its aims in terms of desired outcomes (such as 

enhancements in economic performance or consumer welfare) rather than in terms of 

outputs (such as the number of new law enforcement matters). 

The Commission should engage in regular, periodic consultations with external 

constituencies – including legislators, other public agencies, consumer groups, business 

organizations, academic institutions, and legal societies – about the aims that should 

motivate the agency’s choice of programs and about the interpretation of its authority. 

Useful means to this end would include: 

• Workshops, seminars, and hearings that focus on the conceptual framework for 

applying the agency’s authority. One recent illustration is the workshop the 

Commission conducted in October 2008 on the use of the agency’s power to 

challenge unfair methods of competition under Section 5 of the Federal Trade 

Commission Act. 

• Increased use of blogs and similar tools to foster a conversation about the 

agency’s aims and programs. 

The Commission should engage in regular internal consultations with its 

administrative professionals, attorneys, and economists to discuss the agency’s objectives 

and the selection of measures to accomplish its goals. In addition to measures already 

178
taken, the agency should: 

• Expand the use of policy review sessions in which the Commission meets in 

plenary sessions with the agency staff to examine specific issues. 

• Hold regular town hall meetings, which enable the agency’s entire staff, or major 

operating units, to gather as a group to discuss the agency’s aims and programs. 

• Increase the use of internal protocols that help guide the staff with respect to the 

agency’s aims and the formulation of projects to achieve them. 

The Commission should continue its dialogue with Congress about the utility of 

existing limits on its jurisdiction. For example, the sensibility of exemptions governing 

common carriers, not-for-profit entities, and financial services warrant close examination. 

To leave existing restrictions in place will undermine the capacity of the agency to 

deliver effective, integrated policy solutions to important competition and consumer 

protection problems. 

Agency Structure and Operations 

The Commission should engage in regular assessments of whether its structure 

and operational procedures can be modified to improve its delivery of effective programs. 

The Commission should augment existing efforts to improve communications 

across the agency generally and among its operating units. These efforts might include: 

• Providing a clear statement of the agency’s aims and explanations about how 

individual programs are linked to the attainment of those aims. 

• Expanding efforts, through small group discussions and larger meetings, to 

discuss policy initiatives with the agency’s staff. 

• Creating an internal “wiki” or similar tool for accumulating knowledge about past 

and present agency activities. 

The agency should explore ways to integrate knowledge and expertise more 

effectively across bureaus. This would include: 

• Deeper integration of economic analysis into the formulation of competition and 

consumer protection initiatives. 

• More extensive development of integrated competition and consumer protection 

responses to specific issues. 

179
The agency should expand existing efforts to manage litigation and nonlitigation 

initiatives by measures such as: 

• Setting and reviewing timetables for the completion of all major projects. 

• Refining internal electronic databases to determine the status of each project. 

Resources 

The Commission should explore additional ways to preserve and enhance its 

human capital. Means to this end might include: 

• Intensification of existing efforts to devise personal development plans for each 

employee. 

• Expansion of internal and external training opportunities. 

• Greater movement of staff across operating units as a way of expanding the range 

of experiences within the agency. 

The Commission should continue to develop a capital budget that provides 

periodic increases in outlays for information management and communications systems. 

The purpose of these increases is to ensure that the agency has state-of-the-art capability 

to address the full range of its technology needs. 

The agency should continue to engage Congress in a discussion about the 

possibility for augmenting the existing federal pay scale to enable the FTC to make 

salary-based departures to the private sector less frequent. There is serious question 

about whether the Commission’s capacity, and that of other public agencies in the United 

States, can be sustained at acceptable levels if compensation levels are not increased 

substantially. 

Relationships 

The Commission should expand its efforts to share expertise and develop 

common programs with the Antitrust Division of the Department of Justice. Specific 

measures might include: 

• Development of working groups that will meet regularly to share experience and 

discuss superior techniques for responsibilities such as merger review. 

• Devising a regular program of staff exchanges for attorneys and economists. 

180
• Preparation, in consultation with congressional committees, of a new agreement 

to govern the clearance of law enforcement matters. 

The Commission should expand its formal and informal efforts to build networks 

with other public institutions within the United States. Means to this end might include: 

• Formulation of working groups with individual federal agencies with related 

policymaking responsibilities whose exercise affects the attainment of the 

Commission’s competition policy and consumer protection goals. Memoranda of 

understanding might be prepared to structure these and related measures. 

• Expansion of the scope of cooperation with state competition and consumer 

protection authorities. Focal points for expanded cooperation might include 

common training exercises, broader collaboration on case development, and the 

pooling of experience in areas of shared responsibility. 

• Establishment of a domestic competition network and a domestic consumer 

protection network that would provide a forum for discussion and cooperation for 

officials in public agencies in the United States. 

The Commission should continue and refine its commitment of resources to 

cooperate with foreign competition and consumer protection authorities in the context of 

bilateral, regional, and global networks. Focal points for cooperation might include: 

• In the context of bilateral relationships, greater common efforts to cooperate on 

merger and nonmerger cases, to devise and carry out research projects of common 

interest (such as the evaluation of enforcement decisions taken in matters 

reviewed by both jurisdictions), to prepare workshops and seminars, and to 

conduct routine exchanges of staff. 

The Commission should continue to develop links to academic research 

institutions whose work is related to the agency’s responsibilities. 

The Commission should designate FTC officials to serve as liaisons to 

nongovernment bodies such as consumer groups and industry associations. 

Strategic Planning 

The Commission should consider refinements to the existing collection of 

mechanisms by which it sets priorities and chooses programs. The agency should 

progress toward the refinement of a framework that analyzes proposed FTC litigation and 

nonlitigation matters according to their likely benefits for consumers, their potential 

impact on doctrine or other aspects of public policy, their cost in resources and time, and 

their risk. The agency should view all of its matters as part of a portfolio that should be 

181
balanced across low-, medium-, and high-risk activities. Means to this end might 

include: 

• Expansion of the role of the Office of Policy Planning (an office outside the major 

bureaus) to serve as a focal point for the preparation of materials that the 

Commission can use to establish the agency’s strategic plan. 

• Regular, periodic public consultations to obtain views about the appropriate 

choice of the agency’s competition and consumer protection programs. 

• Development within the Bureau of Competition and the Bureau of Economics of a 

formal planning framework comparable to the mechanism used by the Bureau of 

Consumer Protection. 

Policy Research and Development 

The Commission should consider the refinement of existing processes for 

formulating and carrying out its research program. Measures to this end might include: 

• Formal consideration, as part of the annual budgeting process, of the amount of 

FTC resources to be dedicated to theoretical and applied research projects. 

• Replication within the Bureaus of Competition and Consumer Protection of a 

research planning committee now used by the Bureau of Economics. 

• Use of an agency-wide mechanism – such as the Office of Policy Planning – to 

serve as a clearinghouse for agency research activities. 

The Commission should make the use of its Section 6(b) authority a routine 

element of its research program, including the initiation in each annual budget cycle of 

one or more studies that employ this policy tool. 

The Commission should continue to devote substantial resources to public 

consultations as policymaking tools. In its role as a convener of hearings, workshops, 

seminars, and town hall meetings, the Commission has considerable capacity to learn of 

important legal and economic phenomena and encourage useful public discussion about 

important issues. 

Resource Deployment 

The Commission’s main operating units should devise principles that spell out the 

criteria the staff should use in assigning priority to different enforcement and 

nonenforcement projects. 

182
The Commission should consider setting internal, bureau-specific deadlines for 

investigations and regularly should hold meetings to discuss progress achieved in 

individual matters. 

The Commission should strive to issue a statement that explains why it has closed 

a matter that involved a significant investigation. 

Measuring Effectiveness 

The Commission should continue to improve the measures by which it can assess 

its effectiveness with respect to all areas of its operations. The agency’s goal should be 

to imbed an ethic of self-assessment and continuous improvement. Focal points for this 

effort should include means for assessing the agency’s use of enforcement and 

nonenforcement tools, the completeness and quality of information it provides about its 

activities, its guidance to external constituencies, the timeliness of its operations, the 

justifications for burdens that it imposes on business operators, and its openness to 

proposals offered by constituencies outside the Commission. 

Commission staff should identify in memos recommending agency actions how 

the effectiveness of those actions, if they came to fruition, might be evaluated. 

The Commission should prepare publicly available data sets that report on its 

activities over time. 

The Commission should continue to refine its GPRA performance measures to 

focus on outcomes directly and, as a second-best solution, to devise output measures that 

are likely to serve as good proxies for desired outcomes. 

The Commission should maintain datasets that track the time taken to perform 

routine administrative tasks. 

183
APPENDIX 1 – LIST OF FTC AT 100 ROUNDTABLE PARTICIPANTS

Washington, D.C. Roundtable (July 29-30, 2008) 

William Baer Partner, Arnold & Porter 

 Former Director, FTC Bureau of Competition 

Michael R. Baye Director, FTC Bureau of Economics 

Joan Z. Bernstein Of Counsel, Bryan Cave 

 Former Director, FTC Bureau of Consumer Protection 

Darren A. Bowie Legal Director, North American Markets, Nokia 

Former Attorney Advisor to FTC Chairman Timothy Muris 

Former Assistant Director, Division of Financial Practices 

and Division of Advertising Practices, FTC Bureau of 

Consumer Protection 

Jonathan D. Breul Partner, IBM Global Business Services 

Executive Director, IBM Center for the Business of 

Government 

Jeanne Bumpus Director, FTC Office of Congressional Relations 

John E. Calfee Resident Scholar, American Enterprise Institute 

Former Special Assistant to the Director, FTC Bureau of 

Economics 

 

Stephen Calkins Professor, Wayne State University 

 Former FTC General Counsel 

Robert W. Crandall Senior Fellow, Brookings Institution 

Susan A. Creighton Partner, Wilson Sonsini Goodrich & Rosati 

 Former Director, FTC Bureau of Competition 

Anna H. Davis Executive Director, Government Relations, National Board 

for Professional Teaching Standards 

Former Director, FTC Office of Congressional Relations 

Former Director, FTC Office of Public Affairs 

Susan S. DeSanti Partner, Sonnenschein Nath & Rosenthal 

 Former FTC Deputy General Counsel for Policy Studies 

 Former Director, FTC Office of Policy Planning 

184
Jerry Ellig Senior Research Fellow, Mercatus Center 

Former Acting Director and Deputy Director, FTC Office 

of Policy Planning 

Kathryn M. Fenton Partner, Jones Day 

 Former Attorney Advisor to FTC Chairman James Miller 

Rebecca Fisher Assistant Attorney General, Antitrust Section, Office of the 

Texas Attorney General 

Luke M. Froeb Professor, Owen Graduate School of Management, 

Vanderbilt University 

Former Director, FTC Bureau of Economics 

Vivek Ghosal Professor, School of Economics, Georgia Institute of 

Technology 

Eileen Harrington Deputy Director, FTC Bureau of Consumer Protection 

Thomas W. Hazlett Professor, George Mason University School of Law 

Andrew J. Heimert Office of Policy & Coordination, FTC Bureau of 

Competition 

Ken Heyer Economics Director, Economic Analysis Group, U.S. 

Department of Justice, Antitrust Division 

Nancy N. Judy Director, FTC Office of Public Affairs 

Joseph Kattan Partner, Gibson, Dunn & Crutcher 

Former Assistant Director, Office of Policy & Evaluation, 

FTC Bureau of Competition 

William E. Kovacic Chairman, Federal Trade Commission 

Thomas G. Krattenmaker Of Counsel, Wilson Sonsini Goodrich & Rosati 

Former Advisor, Office of Policy & Coordination, FTC 

Bureau of Competition 

Former Assistant Director, FTC Bureau of Consumer 

Protection 

 

Thomas B. Leary Of Counsel, Hogan & Hartson 

 Former Commissioner, Federal Trade Commission 

Gregory P. Luib Assistant Director, FTC Office of Policy Planning 

185
William C. MacLeod Partner, Kelley Drye 

 Former Director, FTC Bureau of Consumer Protection 

 Former Attorney Advisor to FTC Chairman James Miller 

Janet L. McDavid Partner, Hogan & Hartson 

Timothy J. Muris Of Counsel, O’Melveny & Myers 

Foundation Professor, George Mason University School of 

Law 

Former Chairman, Federal Trade Commission 

Maureen K. Ohlhausen Director, FTC Office of Policy Planning 

Richard Parker Partner, O’Melveny & Myers 

 Former Director, FTC Bureau of Competition 

Paul A. Pautler Deputy Director, FTC Bureau of Economics 

C. Lee Peeler President and CEO, National Advertising Review Council 

Executive Vice President, National Advertising SelfRegulation, Council of Better Business Bureaus 

Former Deputy Director, FTC Bureau of Consumer 

Protection 

Paul H. Rubin Professor of Law and Economics, Emory School of Law 

 Professor of Economics, Emory University 

 Former FTC Director of Advertising Economics 

Michael A. Salinger Professor, Finance and Economics Department, Boston 

University 

Former Director, FTC Bureau of Economics 

Ari Schwartz Vice President & Chief Operating Officer, Center for 

Democracy and Technology 

David P. Wales Acting Director, FTC Bureau of Competition 

Gregory J. Werden Senior Economic Counsel, U.S. Department of Justice, 

Antitrust Division 

186
London Roundtable (September 12, 2008) 

Alden Abbott Associate Director, FTC Bureau of Competition 

David Aitman Co-Head, Global Antitrust, Competition, and Trade 

Practice Group, Freshfields Bruckhaus Deringer 

William Bishop Vice President, Charles River Associates International 

Professor of the Economics of Competition, College of 

Europe in Bruges 

Margaret Bloom Visiting Professor, King’s College, London 

 Senior Consultant, Freshfields Bruckhaus Deringer 

Maria Coppola Tineo Counsel for International Antitrust, FTC Office of 

International Affairs 

John Davies Chief Economist and Former Director of Economic 

Analysis, United Kingdom Competition Commission 

John Fingleton Chief Executive, United Kingdom Office of Fair Trading 

Peter Freeman Chairman and Former Deputy Chairman, United Kingdom 

Competition Commission 

Edward Humpherson Assistant Auditor General and Director of Regulation 

Studies, United Kingdom National Audit Office 

Valentine Korah Emeritus Professor of Competition Law, University 

College London 

Jeremy Lever Fellow and Senior Dean, All Souls College, Oxford 

University 

Philip Marsden Director and Senior Research Fellow, Competition Law 

Forum, British Institute for International and Comparative 

Law 

Maureen Ohlhausen Director, FTC Office of Policy Planning 

Simon Pritchard Senior Director of Mergers, United Kingdom Office of Fair 

Trading 

Debra Valentine Global Head of Legal, Rio Tinto plc 

Former FTC General Counsel 

 

187
John Vickers Warden and Drummond Professor of Political Economy 

and Fellow, All Souls College, Oxford University 

Catherine Waddams Professor, Norwich Business School 

Richard Whish Professor of Law, Kings College, London 

Non-Executive Director and Former Member of the 

Director General of Fair Trading’s Advisory Panel, United 

Kingdom Office of Fair Trading 

 

Stephen Wilks Professor of Politics and Former Deputy Vice Chancellor 

(Research), University of Exeter 

 

188
Ottawa Roundtable (September 18, 2008) 

Anthony Baldanza Senior Partner, Fasken Martineau Dumoulin LLP 

John Bodrug Partner, Davies Ward Phillips & Vineberg LLP 

Paul Crampton Partner, Osler, Hoskin & Harcourt LLP 

Russell Damtoft Associate Director, FTC Office of International Affairs 

Calvin Goldman Chair of the Competition Group, Blake, Cassels & Graydon 

LLP 

Tim Kennish Counsel and former Co-Chair, Osler, Hoskin & Harcourt 

LLP 

William Kovacic Chairman, Federal Trade Commission 

Margaret Sanderson Vice President, Charles River Associates International 

A. Neil Campbell McMillan LLP (consultation held Sept. 17, 2008) 

189
Chicago Roundtable (September 25, 2008) 

Alden F. Abbott Associate Director, FTC Bureau of Competition 

C. Steven Baker Director, FTC Midwest Region 

Michael R. Baye Director, FTC Bureau of Economics 

William L. Brauch Special Assistant Attorney General and Director, Consumer 

Protection Division, Office of the Iowa Attorney General 

Henry N. Butler Executive Director, Searle Center on Law, Regulation, and 

Economic Growth at Northwestern University 

 Senior Lecturer, Northwestern University School of Law 

Thomas Campbell Partner, Baker & McKenzie LLP 

Denis W. Carlton Senior Managing Director, Compass Lexecon 

Professor of Economics, University of Chicago Graduate 

School of Business 

Blake L. Harrop Senior Assistant Attorney General, Antitrust Bureau, Office 

of the Illinois Attorney General 

Paul H. Luehr Managing Director and Deputy General Counsel, Stroz 

Friedberg, LLC 

Former Assistant Director, Division of Marketing Practices, 

FTC Bureau of Consumer Protection 

Fred M. McChesney Professor of Law, Northwestern University School of Law 

Former Associate Director, Office of Policy & Evaluation, 

FTC Bureau of Competition 

Aviv Nevo Professor, Department of Economics and Kellogg School 

of Business, Northwestern University 

Randal C. Picker Professor of Commercial Law, University of Chicago Law 

School 

Teresa M. Schwartz Professor Emeritus of Public Interest Law, George 

Washington University School of Law 

Former Deputy Director, FTC Bureau of Consumer 

Protection 

Former Attorney Advisor to FTC Commissioner Mary 

Gardiner Jones 

190
Carl Shapiro Professor of Business Strategy, Haas School of Business, 

University of California at Berkeley 

Director, Institute of Business and Economic Research, 

University of California at Berkeley 

Abraham L. Wickelgren Assistant Professor of Law, Northwestern University Law 

School 

 Visiting Professor, Duke University School of Law 

Former Economist, FTC Bureau of Economics 

Joshua D. Wright Assistant Professor of Law, George Mason University 

School of Law 

 Visiting Professor, University of Texas School of Law 

Former Scholar in Residence, FTC Bureau of Competition 

191
Tokyo Roundtable (October 7, 2008) 

Alden F. Abbott Associate Director, FTC Bureau of Competition 

Yasuhisa Abe Director, Economic Policy Bureau II, Nippon Keidanren 

Toru Aizeki Deputy Secretary General of International Affairs, Japan 

Fair Trade Commission 

Kei Amemiya Partner, Morrison & Foerster LLP 

Robert Grondine Partner, White & Case 

William Kovacic Chairman, Federal Trade Commission 

Mitsuo Matsushita Advisor, Nagashima, Ohno & Tsunematsu 

Professor Emeritus, Tokyo University 

Masahiro Murakami Professor, Graduate School of International Corporate 

Strategy, Hitosubashi University 

Hideo Nakajima Deputy Secretary General, Trade Practices Department, 

Japan Fair Trade Commission 

Deirdre Shanahan Competition Counsel for Asia Pacific, FTC Office of 

International Affairs 

Shozo Takahashi Director, General Affairs Division, Secretariat, Japan Fair 

Trade Commission 

Kazuhiko Takeshima Chair, Japan Fair Trade Commission 

Jiro Tamura Professor, Keio University 

Akinori Uesugi Senior Consultant, Freshfields Bruckhaus Deringer 

Professor, Graduate School of International Corporate 

Strategy, Hitotsubashi University 

Kimitoshi Yabuki Head, Yabuki Law Offices 

192
Boston Roundtable (October 14, 2008) 

Alden F. Abbott Associate Director, FTC Bureau of Competition 

Einer R. Elhauge Caroll and Milton Petrie Professor of Law, Harvard Law 

School 

Hillary Greene Associate Professor of Law, University of Connecticut 

School of Law 

Former FTC Project Director for Intellectual Property 

Andrew J. Heimert Office of Policy & Coordination, FTC Bureau of 

Competition 

Keith N. Hylton Paul J. Liacos Scholar in Law and Professor of Law, 

Boston University School of Law 

Robert M. Langer Partner, Wiggin and Dana 

Nancy L. Rose Professor of Economics, Massachusetts Institute of 

Technology 

Director, National Bureau of Economic Research Program 

in Industrial Organization 

Michael A. Salinger Professor and Everett W. Lord Distinguished Faculty 

Scholar, Finance and Economics Department, Boston 

University 

Former Director, FTC Bureau of Economics 

Dennis Yao Lawrence E. Fouraker Professor of Business 

Administration, Harvard Business School 

Former Commissioner, Federal Trade Commission 

 

193
Brussels Roundtable (October 21, 2008) 

Alden Abbott Associate Director, FTC Bureau of Competition 

Antonio Bavasso Partner, Allen & Overy 

Professor of EC Competition Law and Founder and 

Director of the Jevons Institute, UCL 

Hendrik Bourgeois Senior Counsel, Competition, Regulation and Government 

Relations for Europe, General Electric Company 

Rachel Brandenburger Partner, Freshfields Bruckhaus Deringer 

James Cooper Acting Director, FTC Office of Policy Planning 

Götz Drauz Partner, Howrey 

Luc Gyselen Partner, Arnold & Porter 

Jonas Koponen Partner, Linklaters 

William Kovacic Chairman, Federal Trade Commission 

Jorge Padilla Managing Director, LECG 

 Research Fellow, Center for Economic Policy Research 

John Temple Lang Consultant, Cleary Gottlieb 

 Senior Visiting Research Fellow, University of Oxford 

 Visiting Professor, Trinity College, Dublin 

 

James Venit Partner, Skadden, Arps 

 

194
Paris Roundtable (October 24, 2008) 

Alden Abbott Associate Director, FTC Bureau of Competition 

James Cooper Acting Director, FTC Office of Policy Planning 

Sean Ennis Senior Economist, Organization for Economic Cooperation 

and Development 

Allan Fels Dean of the Australia and New Zealand School of 

Government 

Alberto Heimler Central Director for Research and International Affairs, 

Italian Competition Authority 

Nicholas Hill Chief Executive, New Zealand Commerce Commission 

Rene Jansen Member of the Board, Netherlands Competition Authority 

(NMa) 

Frederic Jenny Member of the Cours de Cassation, France 

Chairman, Competition Committee, Organization for 

Economic Cooperation and Development 

William Kovacic Chairman, Federal Trade Commission 

Csaba Kovacs Head of Section, Hungarian Competition Authority (GVH) 

Markus Lange Head of the International Section of the Bundeskartellamt, 

Germany 

François Lévêque Professor of Law and Economics, Ecole des Mines de Paris 

Francisco Marcos Fernandez Professor of Law, IE Law School 

Director General of the Defence Competition Service, 

Madrid Regional Competition Court 

Andreas Mundt Head of Section, General Competition Law Issues, 

Bundeskartellamt, Germany 

Zoltán Nagy President, Hungarian Competition Authority (GVH) 

Bernard (Joe) Phillips Head of the Competition Division, Organization for 

Economic Cooperation and Development 

195
Simon Roberts Divisional Manager of Policy and Research, South African 

Competition Commission 

Jacques Steenbergen Director General, Belgian Competition Authority 

Walter Stoffel Chairman, Swiss Competition Commission 

Professor of Economic Law, University of Fribourg 

Monica Widegren Head of International Section, Swedish Competition 

Authority 

196
New York Roundtable (October 24, 2008) 

Joseph Angland Partner, White & Case 

Michael D. Blechman Partner, Kaye Scholer LLP 

Molly S. Boast Partner, Debevoise & Plimpton LLP 

Former Director, FTC Bureau of Competition 

Beau Brendler Director, Consumer Reports WebWatch, Consumers Union

Daniel Brenner Senior Vice President, Law and Regulatory Policy, 

 National Cable & Telecommunications Association 

Jerry Cerasale Senior Vice President, Government Affairs, Direct 

Marketing Association 

Former Attorney Advisor to FTC Chairman Janet Steiger 

Kevin G. DeMarrais Senior Business Writer/Columnist, The Record (Bergen 

County, NJ) 

Joy Feigenbaum Chief, Bureau of Consumer Frauds and Protection, Office 

of the New York Attorney General 

Harry First Professor of Law and Director, Trade Regulation Program, 

New York University School of Law 

Eleanor M. Fox Professor of Trade Regulation, New York University 

School of Law 

 Of Counsel, Simpson Thacher & Bartlett 

Leonard L. Gordon Director, FTC Northeast Region 

Jeffrey A. Greenbaum Partner, Frankfurt Kurnit Klein & Selz, PC 

Lois C. Greisman Associate Director, FTC Bureau of Consumer Protection 

Michael Kaiser Executive Director, National Cyber Security Alliance 

Georges G. Korsun Director, Economic and Statistical Consulting, Deloitte 

Financial Advisory Services, LLP 

Cynthia L. Lagdameo Counsel for International Antitrust, FTC Office of 

International Affairs 

197
Andrea C. Levine Director, National Advertising Division 

 Senior Vice President, Council of Better Business Bureaus 

Maureen K. Ohlhausen Director, FTC Office of Policy Planning 

Andreas P. Reindl Adjunct Professor of Law and Executive Director, Fordham 

Competition Law Institute, Fordham University School of 

Law 

David T. Scheffman Director, LECG 

Adjunct Professor, Owen Graduate School of Management, 

Vanderbilt University 

Former Director, FTC Bureau of Economics 

Peter P. Swire Professor of Law, Ohio State University Moritz College of 

Law 

 Senior Fellow, Center for American Progress 

198
APPENDIX 2 – LIST OF AGENCIES, ORGANIZATIONS, AND INDIVIDUALS 

PARTICIPATING IN FTC AT 100 EXTERNAL CONSULTATIONS

Israeli Antitrust Authority, August 19, 2008 

Korean Fair Trade Commission, September 4, 2008 

Latin American Competition Agencies and International Organizations, 

September 11, 2008: 

Superintendent of Companies, Bolivia 

Administrative Council for Economic Defense (CADE), Brazil 

Secretariat of Economic Law, Brazil 

National Economic Prosecutor’s Office, Chile 

Superintendent of Commerce, Colombia 

Commission to Promote Competition, Costa Rica 

Ministry of Economy, Ecuador 

Superintendent of Competition, El Salvador 

Commission for the Defense and Promotion of Competition, Honduras 

Federal Competition Commission, Mexico 

Authority for Consumer Protection and Competition Defense, Panama 

Competition Authority, Portugal 

Inter-American Development Bank 

Organization for Economic Cooperation and Development 

United Nations Conference on Trade and Development 

United Kingdom Office of Fair Trading, September 11, 2008 

United Kingdom Competition Commission, September 12, 2008 

United Kingdom Department for Business, Enterprise & Regulatory Reform, 

September 12, 2008 

United Kingdom Consumer Organization Representatives, September 12, 2008: 

 Citizen’s Advice 

 Consumer Focus (formerly National Consumer Council) 

 Privacy International 

 Trading Standards Institute/European Citizen’s Centre 

Japanese Ministry of Economy, Trade, and Industry, September 17, 2008 

Canadian Competition Bureau, September 17, 2008 

Royal Canadian Mounted Police, September 17, 2008 

199
Ontario Ministry of Small Business and Consumer Services, September 17, 2008 

Japan Fair Trade Commission, September 19, 2008 

Japanese Cabinet Office, September 19, 2008 

South African Competition Tribunal, September 19, 2008 

Australian Competition and Consumer Commission, October 2 & 6, 2008 

Melbourne, Consultation with Private Sector Stakeholders, October 2, 2008: 

Andrew Christopher Partner, Baker & McKenzie 

Linda Evans Partner, Clayton Utz 

Aymon Guigus Partner, Blake Dawson 

Dave Poddar Partner, Mallesons Stephen Jaques 

William Reid Partner, Blake Dawson 

Simon Uthmeyer Partner, DLA Phillips Fox 

Latin American Consumer Protection Agencies and International Organizations, 

October 8, 2008: 

 Subsectariat for Consumer Protection, Argentina 

 National Consumer Service, Chile 

 Superintendence for Consumer Protection, Colombia 

 Directorate for Consumer Protection, Costa Rica 

 Office for the Defense of the Consumer, El Salvador 

 Directorate for Consumer Protection, Guatemala 

 Attorney General for Consumer Protection, Mexico 

 Directorate for Consumer Protection, Nicaragua 

 National Institute for Defense of Competition and Property Protection, Peru 

 National Institute for Consumption, Spain 

Buenos Aires, Consultation with Private Sector Stakeholders, October 14, 2008: 

Marcelo Calliari Partner, TozziniFreire Advogados, Brazil 

Miguel del Pino Partner, Marval, O’Farrell & Mairal, Argentina 

Marcelo den Toom Partner, M. & M. Bomchil Abogados, Argentina 

Mauro Grinberg Partner, Barcellos Tucunduva Advogados, Brazil 

Ubiratan Mattos Partner, Mattos Muriel Kestener Advogados, Brazil 

Julian Peña Partner, Allende & Brea, Argentina 

Directorate General for Health and Consumer Affairs, European Commission, 

October 20, 2008 

200
201

Article 29 Data Protection Working Party (independent advisory group to European 

Commission), October 20, 2008 

Directorate General for Competition, European Commission, October 21 & 23, 2008 

Representatives from several member and observer consumer agencies and governmental 

ministries to the OECD Committee on Consumer Policy, October 22, 2008 

Conseil de la Concurrence, France, October 23, 2008 

Washington, DC Consultation on International Issues, November 6, 2008: 

Donald Baker Baker & Miller 

Terry Calvani Of Counsel, Freshfields Bruckhaus Deringer 

 Former Acting Chairman and Commissioner, FTC 

Andrew Gavil Professor of Law, Howard University School of Law 

(consultation held Nov. 20, 2008) 

R. Shyam Khemani Principal, Microeconomic Consulting & Research 

Associates, Inc. 

Ilene Knable Gotts Partner, Wachtell Lipton Rosen & Katz 

William Kolasky Partner, Wilmer Cutler Pickering Hale and Dorr LLP 

Abbott (Tad) Lipsky Partner, Latham & Watkins, LLP (consultation held 

Nov. 20, 2008) 

Deborah Platt Majoras General Counsel, Procter & Gamble 

Former Chairman, Federal Trade Commission 

Janet McDavid Partner, Hogan & Hartson LLP 

James Rill Senior Partner, Howrey LLP 

Mark Whitener Senior Counsel, General Electric Company 

Irish Competition Authority, November 27, 2008 

Australian Communications & Media Authority (via written correspondence)