Federal Register / Vol. 60, No. 149 / Thursday, August 3, 1995 / Notices 39741

ACTION: Notice of Meeting

SUMMARY: The Federal Reserve Board is

announcing a series of public meeting in

connection with the application of Fleet

Financial Group Inc., Providence,

Rhode Island, to acquire Shawmut

National Corporation, Boston,

Massachusetts, and Hartford,

Connecticut, pursuant to sections 3 and

4 of the Bank Holding Company Act of

1956.

FOR FURTHER INFORMATION CONTACT:

Diane A. Koonjy, Senior Attorney, Legal

Division (202-452-3274), or Patricia A.

Robinson, Attorney, Legal Division

(202-452-3005), or Kathleen Conley,

Review Examiner, Division of Consumer

and Community Affairs (202-452-2389),

Board of Governors of the Federal

Reserve System, Washington, D.C.

20551. For the hearing impaired only,

Telecommunication Device for the Deaf

(TDD), Dorthea Thompson (202-452-

3344), Board of Governors of the Federal

Reserve System, 20th and C Streets,

N.W., Washington, D.C. 20551.

SUPPLEMENTARY INFORMATION:

Background and Public Meeting Notice

On July 7, 1995, Fleet Financial

Group, Inc., Providence, Rhode Island

(Fleet), applied pursuant to sections 3

and 4 of the Bank Holding Company Act

(12 U.S.C. §§ 1842, 1843)(BHC Act) to

acquire Shawmut National Corporation,

Boston, Massachusetts, and Hartford,

Connecticut (Shawmut), and thereby

acquire the banking and nonbanking

subsidiaries of Shawmut. Under

authority delegated by the Board of

Governors of the Federal Reserve

System (Board) in section 265.6(a)(2) of

the Board’s Rules, the General Counsel

of the Board hereby orders that public

meetings on the applications be held in

Boston, Massachusetts; Hartford,

Connecticut, and Albany, New York,

beginning August 26, 1995, to collect

information on the convenience and

needs of the communities to be served

by this proposal, including the records

of performance of these institutions

under the Community Reinvestment Act

(CRA).

The public meetings well be held at

the following locations:

Boston-Saturday, August 26, 1995, at

the Federal Reserve Bank of Boston, 600

Atlantic Avenue, Boston, Massachusetts

02106. The meeting will begin at 9:00

a.m.

Hartford-Monday, August 28, at the

Wild Auditorium, Gray Conference

Center, University of Hartford, 200

Bloomfield Avenue, West Hartford,

Connecticut 06117. The meeting will

begin at 12:00 noon, E.D.T.

Albany-Tuesday, August 29, at the

New York State Museum, Museum

Theater, West Gallery, Cultural

Education Center, Empire State Plaza,

Madison Avenue, Albany, New York

12230. The meeting will begin at 12:00

noon, E.D.T.

To accommodate interested persons,

the public meetings in Hartford,

Connecticut, and Albany, New York,

will include evening hours scheduled

for testimony.

Purpose and Procedures

The purpose of the public meetings is

to receive information regarding the

convenience and needs of the

communities to be served by this

proposal, including the records of

performance of Fleet and Shawmut

under the CRA. The CRA requires the

appropriate federal financial

supervisory agency to ‘‘assess [an]

institution’s record of meeting the credit

needs of its entire community,

including low- and moderate-income

neighborhoods, consistent with the safe

and sound operation of [the]

institution.’’ 12 U.S.C. § 2903. The

Board, as a federal financial supervisory

agency, is required to take this record

into account in its evaluation of an

application under section 3 of the BHC

Act.

The public meetings are convened

under the Board’s policy statement

regarding informal meetings in section

262.25(d) of the Board’s Rules (12 C.F.R.

225.25(d)). This policy statement

provides that the purpose of a public

meeting is to elicit information, to

clarify factual issues related to an

application, and to provide testimony.

In contrast to a formal administrative

hearing, the rules for taking evidence in

an administrative proceeding will not

apply to these public meetings.

Testimony at the public meetings will

be presented to a panel consisting of a

Presiding Officer, Griffith L. Garwood,

Director of the Board’s Division of

Consumer and Community Affairs, or

his designee, and other panel members

appointed by the Presiding Officer.

These panel members may question

witnesses, but no cross-examination of

witnesses will be permitted.

In conducting each public meeting,

the Presiding Officer will have the

authority and discretion to ensure that

the meeting proceeds in a fair and

orderly manner. The public meetings

will be transcribed and information

regarding procedures for obtaining a

copy of the transcripts will be

announced at the public meetings.

All persons wishing to testify at the

public meetings should submit a written

request to William W. Wiles, Secretary

of the Board, Board of Governors of the

Federal Reserve System, 20th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20551 (facsimile: 202-

452-3819), not later than August 16,

1995, providing the following

information:

(i) identification of which meeting

they wish to attend,

(ii) a brief statement of the nature of

the expected testimony and the

estimated time required for the

presentation,

(iii) address and telephone number

(and facsimile number, if available), and

(iv) identification of any special

needs, such as persons desiring

translation services, persons with a

physical disability who may need

assistance, or persons using visual aids

for their presentation. To the extent

available, translators will be provided to

persons wishing to present their views

in a language other than English if they

include this information in their request

to testify.

Persons interested only in attending a

meeting do not need to submit a written

request to attend.

On the basis of the requests received,

the Presiding Officer will prepare a

schedule for persons wishing to testify.

Persons not listed on the schedule may

be permitted to speak at the public

meetings at the discretion of the

Presiding Officer if time permits at the

conclusion of the schedule of witnesses.

Copies of testimony may, but need not,

be filed with the Presiding Officer

before a person’s presentation.

By order of the General Counsel of the

Board of Governors, acting pursuant to

authority delegated by the Board of

Governors, effective, July 27, 1995.

William W. Wiles,

Secretary of the Board.

[FR Doc. 95–19105 Filed 8–2–95; 8:45am]

BILLING CODE 6210–01–F

FEDERAL TRADE COMMISSION

Administrative Litigation Following the

Denial of a Preliminary Injunction:

Policy Statement

AGENCY: Federal Trade Commission.

ACTION: Policy statement, and

accompanying Commission statement,

with request for public comment.

SUMMARY: The Federal Trade

Commission has adopted policies

explaining how, after a court had denied

preliminary injunctive relief to the

Commission, the Commission decides

whether administrative litigation should

be commenced or, if it has already been

commenced, should be continued.

While the policies are already in effect,

the Commission will receive comment

for thirty days, and will thereafter take
39742 Federal Register / Vol. 60, No. 149 / Thursday, August 3, 1995 / Notices

1As used herein, the term ‘‘merger’’ includes

mergers, acquisitions, joint ventures, and equivalent

transactions.

2For FY 1990 through FY 1994, the Commission

resolved complaints through administrative consent

orders, without authorizing either federal court or

administrative litigation, in 67% of the merger

enforcement actions that the Commission

authorized.

3For FY 1990 through FY 1994, the Commission

authorized preliminary injunction actions in 29%

of the merger enforcement actions that it

authorized; in 4% of its merger enforcement

actions, the Commission authorized administrative

trials without first proceeding to federal court for

a preliminary injunction.

4 During the five-year period covered by fiscal

years 1990–1994, five out of seven of the

Commission’s motions for a preliminary injunction

were granted. In one case, FTC v. University Health,

Inc., 938 F.2d 1206 (11th Cir. 1991), the district

court’s denial of a preliminary injunction was

reversed on appeal. For fiscal years 1985–1989, the

Commission was successful in six out of nine

motions for a preliminary injunction.

5R.R. Donnelley & Sons, Dkt. 9243, is currently

before the Commission on respondents’ appeal from

the Initial Decision of the administrative law judge.

In Owens-Illinois, Inc., Dkt. No. 9212, the

Administrative Law Judge (‘‘ALJ’’) found liability

but the Commission reversed. 1987–1993 Transfer

Binder (CCH) ¶ 22,731 (Sept. 11, 1989) (Initial

Decision), rev.d, 1987–1993 Transfer Binder (CCH)

¶ 23,162 (Feb. 26, 1992). In Promodes, S.A., Dkt.

No. 9928, the administrative complaint was settled.

113 F.T.C. 372 (1990). In Occidental Petroleum Co.,

Dkt. No. 9205, both the ALJ and the Commission

found liability. 1987–1993 Transfer Binder (CCH)

¶ 22,603 (Sept. 30, 1988) (Initial Decision), aff’d, 5

Trade Reg. Rep. (CCH) ¶ 23,370 (Dec. 22, 1992),

appeal dismissed pursuant to stipulation and

modified order, 5 Trade Reg. Rep. (CCH) ¶ 23,531

(Jan. 14, 1994). In a fifth case, Lee Memorial

Hospital, Dkt. No. 9265, the administrative

proceeding, which was filed prior to the district

court’s denial of a preliminary injunction, has been

stayed pending appeal.

6Hospital Corp. of America v. FTC, 807 F. 2d

1381, 1386 (7th Cir. 1986), cert. denied, 481 U.S.

1038 (1987) (‘‘HCA’’).

7HCA, 807 F. 2d at 1386.

8For example, the Commission’s decision in

Occidental Petroleum provided important guidance

on supply side substitution and coordinated

interactions in merger analysis. The Commission’s

decision in HCA explained how coordination could

occur in an industry with differentiated and nonhomogeneous products. Judge Posner, writing for

the Seventh Circuit affirming that decision, called

it a ‘‘model of lucidity.’’ 807 F. 2d at 1385. The

Commission’s decision in American Medical

International, Inc., 104 F.T.C. 1 (1984) examined in

detail the dimensions of price and non-price

competition in the hospital industry and discussed

efficiencies considerations in analyzing a merger.

9The Supreme Court’s last opinion on

substantive merger law was United States v.

General Dynamics Corp., 415 U.S. 486 (1974).

such further action as may be

appropriate.

DATES: The policy statement was

effective on June 21, 1995. Comments

will be received until September 5,

1995.

ADDRESSES: Comments should be sent to

the Secretary, Federal Trade

Commission, Sixth Street and

Pennsylvania Avenue, NW.,

Washington, DC 20580. Comments will

be entered on the public record of the

Commission and will be available for

public inspection in Room 130 during

the hours of 9 a.m. until 5 p.m.

FOR FURTHER INFORMATION CONTACT:

William Baer, Director, Bureau of

Competition, (202) 326–2932, or Ernest

Nagata, Deputy Assistant Director for

Policy and Evaluation, Bureau of

Competition, (202) 326–2714.

SUPPLEMENTARY INFORMATION: 1. On June

21, 1995, the Commission issued the

following statement to accompany its

policy statement:

Commission Statement to Accompany

Statement of Federal Trade

Commission Policy Regarding

Administrative Merger Litigation

Following the Denial of a Preliminary

Injunction

Introduction

The Federal Trade Commission is

charged with ensuring that U.S.

consumers are protected from higher

prices, lower quality, and lessened

innovation that could result from

anticompetitive mergers.1 Historically,

the Commission has resolved merger

cases through administrative trials or

consent orders. In recent times, most of

the Commission’s antitrust complaints

have been settled through

administrative consent orders.2 For

those relatively few merger cases in

which the Commission has litigated, the

Commission’s usual practice in recent

years has been first to seek a

preliminary injunction in federal

district court to prevent the

consummation of the proposed

transaction.3 The Commission has won

most of its challenges at the federal

district court level.4

There have been five instances in the

last ten years in which a federal district

court has refused to grant a preliminary

injunction sought by the Commission,

and the Commission then proceeded

with a challenge to the merger in

administrative litigation.5 In such

circumstances, the determination to

continue a merger challenge in

administrative litigation is not, and

cannot be, either automatic or

indiscriminate. In any given case, the

evidence, arguments, and/or opinion

from the preliminary injunction hearing

may, or may not, suggest that further

proceedings would be in the public

interest. The Commission’s guiding

principle is that the determination

whether to proceed in administrative

litigation following the denial of a

preliminary injunction and the

exhaustion or expiration of all avenues

of appeal must be made on a case-bycase basis.

The Commission is issuing the

attached Statement to clarify the process

it follows in deciding whether to pursue

administrative litigation following

denial of a preliminary injunction. The

Statement also notes that, if necessary,

the Commission will adopt certain

procedures to ensure parties to a

transaction the opportunity to have their

views heard by the Commission before

it makes its determination.

In order to place these issues in

context, this Statement begins by

addressing the value of administrative

litigation and why a preliminary

injunction proceeding, regardless of its

outcome, may not in and of itself

provide a sufficient basis for the

resolution of complex merger litigation.

The Value of Administrative Litigation

The Federal Trade Commission was

created in part because Congress

believed that a special administrative

agency would serve the public interest

by helping to resolve complex antitrust

questions. Congress intended that the

Commission would play a ‘‘leading role

in enforcing the Clayton Act, which was

passed at the same time as the statute

creating the Commission.’’ 6 It was

expected that an administrative agency

was especially suited to resolving

difficult antitrust questions, and that the

FTC should be the principal fact finder

in the process: it is ‘‘within the

Commission’s primary responsibility’’

to draw inferences of competitive

consequences from the underlying

facts.7

The Commission has fulfilled that

special role in a number of important

merger cases.8 Administrative cases

provide valuable guidance on how the

Commission applies the relevant legal

standards and analytical principles as

they evolve over time. Application of

these standards and principles to

concrete factual situations, developed in

a full record, can provide insight into

why certain mergers are likely to harm

competition and result in consumer

injury, and why others may not.

Especially because the Supreme Court

has addressed substantive issues of

merger law only rarely in recent

decades,9 and because antitrust law

during that time has evolved in

response to economic learning, the

Commission’s opinions have been an

important vehicle to provide guidance

to the business community on how to

analyze complex merger issues.
Federal Register / Vol. 60, No. 149 / Thursday, August 3, 1995 / Notices 39743

1Although the focus of this policy statement is

merger litigation, similar principles would apply

following the denial of a preliminary injunction in

the context of non-merger competition litigation.

2 16 CFR 3.1 et seq.

Why A Preliminary Injunction

Proceeding May Not Be A Sufficient

Substitute for Administrative Litigation

If the same value could be achieved

through a preliminary injunction

proceeding as through administrative

litigation, then there would be no reason

for the Commission ever to proceed past

the preliminary injunction phase. The

differences between the two types of

proceedings, however, mean that one

does not equate with the other.

A preliminary injunction hearing has

a limited purpose: to determine whether

to enjoin the consummation of a

proposed transaction pending a full

adjudication on the merits. Thus, the

district overseeing a preliminary

injunction hearing is not charged with

making a final ruling on whether the

acquisition in unlawful.

Indeed, there may be an inadequate

basis for doing so. Because a

preliminary injunction proceeding has a

limited purpose, the evidentiary record

produced is often limited in scope. A

court may not hear any witnesses, but

instead may rule solely on the basis of

the papers filed by the parties. A

preliminary injunction proceeding is

generally much shorter in duration than

a full trial, and, because of its expedited

nature, the thoroughness of the

evidentiary presentation and analysis

may be less than would be expected in

a full trial. Since merger analysis can be

a highly complex, fact-intensive

undertaking, it may be particularly illsuited for final resolution on the merits

in the abbreviated forum of a

preliminary injunction proceeding.

Some commentators have suggested

that because the Department of Justice

lacks the ability to challenge mergers in

the administrative process, the

Commission’s litigation should be

confined to the federal courts in order

to bring the two agency’s enforcement

powers in line with one another. The

problem with such an approach is that

the significant benefits of administrative

litigation outlined above would be lost

in such a change in enforcement policy.

The business community would be

denied the guidance provided by merger

decisions based on a complete analysis

of a full evidentiary record, and

Congress’ vision of the FTC’s central

role in merger enforcement would be

subverted.

Nonetheless, the Commission

recognizes that automatic pursuit of

administrative litigation following

denial of a preliminary injunction is not

required to serve the public interest.

The attached Statement of Policy is

intended to clarify the process the

Commission follows in determining

whether to pursue administrative

litigation following denial of a

preliminary injunction.

2. On June 21, 1995, the Commission

issued the following policy statement:

Statement of Federal Trade

Commission Policy Regarding

Administrative Merger Litigation

Following the Denial of a Preliminary

Injunction

The Commission will assess on a

case-by-case basis whether to pursue

administrative litigation following the

denial of a preliminary injunction.1 If

necessary, the Commission will amend

its Rules of Practice 2 in order to

facilitate the reconsideration of the

public interest in continuing with an

administrative case when an

administrative complaint has already

issued.

As discussed in the Commission

Statement to Accompany Statement of

Policy Regarding Administrative Merger

Litigation Following the Denial of a

Preliminary Injunction, the Commission

believes that it would not be in the

public interest to forego an

administrative trial solely because a

preliminary injunction has been denied.

Nor would it be in the public interest to

require an administrative trial in every

case in which a preliminary injunction

has been denied. Thus, a case-by-case

determination is appropriate. This

approach gives the Commission the

opportunity to assess such matters as (i)

the factual findings and legal

conclusions of the district court or any

appellate court, (ii) any new evidence

developed during the course of the

preliminary injunction proceeding, (iii)

whether the transaction raises important

issues of fact, law, or merger policy that

need resolution in administrative

litigation, (iv) an overall assessment of

the costs and benefits of further

proceedings, and (v) any other matter

that bears on whether it would be in the

public interest to proceed with the

merger challenge.

If necessary, the Commission will

amend Part 3 of the Commission’s Rules

of Practice to expedite its review of the

issues and determination immediately

following the denial of a preliminary

injuction and the exhaustion or

expiration of all avenues of appeal. The

issuance of an administrative complaint

during the pendency of a preliminary

injunction proceeding will affect only

the nature of the procedures under

which such considerations will be

reviewed, not whether they will be

reviewed.

If an administrative complaint has not

been issued by the time of the district

court’s ruling on a preliminary

injunction and the exhaustion or

expiration of all avenues of appeal, the

Commission’s consideration of whether

to issue an administrative complaint

will be conducted under its normal

procedures for non-adjudicatory

matters. If an administrative complaint

has already been issued, the

Commission will make its

determination within the procedural

framework for adjudicatory proceedings

under Part 3 of the Commission’s Rules

of Practice.

The policy articulated in this

Statement is applicable to any current

and future merger enforcement actions

initiated by the Commission under

Section 13(b) of the Federal Trade

Commission Act. The Commission

intends, however, to issue within thirty

days a Federal Register notice soliciting

public comment on the Commission’s

policy and, if necessary, setting forth

any conforming amendments to Part 3 of

its Rules of Practice.

3. The Commission has determined to

adopt a new rule, 16 CFR § 3.26, to

facilitate review of the public interest in

continuing an adjudicative proceeding

when, after the adjudicative proceeding

has begun, a court denies preliminary

injunctive relief in a section 13(b) case

brought in aid of the adjudication.

Under rule 3.26, which is published

elsewhere in this issue, respondents can

choose to have such review conducted

either within the framework for

adjudicative proceedings, or following

withdrawal of the administrative case

from adjudication.

Also, as noted in footnote 1 of the

June 21 policy statement, the principles

applicable to administrative merger

litigation would apply in the context of

non-merger competitive litigation. They

are also applicable in the context of

consumer protection litigation.

By direction of the Commission,

Commissioner Azcuenaga concurring in part

and dissenting in part.

Donald S. Clark,

Secretary.

Dissenting Statement of Commissioner

Mary L. Azcuenaga Concerning FTC’S

Adoption of Rule 3.26 Respecting

Administrative Litigation Following

Denial of a Preliminary Injunction

On June 26, 1995, the Commission

issued a Statement of Policy Regarding

Administrative Merger Litigation

Following the Denial of a Preliminary

Injunction and an accompanying
39744 Federal Register / Vol. 60, No. 149 / Thursday, August 3, 1995 / Notices

1These materials appear again in this volume of

the Federal Register.

2See 15 U.S.C. § 53(b).

3Notice of Final Rule with Request for Public

Comment, 60 Fed. Reg.lll, Slip Notice at 2–3.

4 I do not oppose the alternative procedure

included in the new rule, which expressly

authorizes a motion by any respondent to dismiss

the complaint in the public interest. Although the

alternative procedure is redundant in light of

existing Rules 3.22 and 3.23, 16 CFR §§ 3.22 and

3.23 (1995), I do not find it objectionable because

the arguments would be presented on the record

unless the Commission directs otherwise.

5See, e.g., Rule 3.22 governing adjudicative

motions and Rule 3.23 governing interlocutory

appeals. The Commission also, of course, may act

sua sponte to seek briefing from the parties or to

dismiss the complaint.

6Confidential communications between the

Commission and its staff before a matter enters

adjudication and when the Commission is still

carrying out its prosecutorial responsibility make

sense. In our system of law, investigational and

prosecutorial decisions are protected from public

scrutiny. See 5 U.S.C. § 552(b)(5). Such confidential

communications after the prosecutorial function

has concluded with the issuance of a complaint,

however, raise issues concerning the exercise by the

Commission of its quasi-judicial function.

7 60 Fed. Reg. lll, Slip Notice at 4.

8 Id.

9At this point, all further communications

between the parties (complaint counsel and the

respondent(s) are on the record with certain

specified exemptions. Rule 4.7, 16 CFR § 4.7.

explanation.1 These documents reaffirm

the Commission’s longstanding policy,

consistent with Section 5 of the FTC

Act, 15 U.S.C. § 45(b), of reconsidering

whether to pursue administrative

litigation following the denial of

preliminary relief by the courts. Section

5 requires that the Commission premise

issuance of an adjudicative complaint

on finding reason to believe that the law

has been violated and that enforcement

would be in the public interest. This

obligation continues implicitly

throughout the proceeding, requiring

the Commission to take all reasonable

steps to assure itself that an enforcement

action, once begun, remains in the

public interest. I joined in that

Statement.

The Commission now adopts new

Rule 3.26 to govern how the agency will

proceed if a court denies a requested

preliminary injunction pending

completion of an administrative

adjudication.2 A central feature of the

new rule is that following the court’s

action, the respondents may choose to

have the administrative matter removed

from adjudication to permit the parties

to discuss with the Commission

privately, off the record and ‘‘without

the constraints of adjudicative rules,’’ 3

the public interest in continuing the

adjudication in light of the court’s

action.4 Strictly speaking, no revision of

the Rules is necessary because existing

provisions of the Rules of Practice are

sufficient to permit the Commission to

address any effect the court’s action may

have on the public interest in

continuing the adjudication.5

Nevertheless, I have no objection to

adopting a new rule to provide specific

procedures for reconsidering an

administrative adjudication following

denial of a preliminary injunction. My

difference of opinion is this: I believe

that a rule adopted to address this

situation should provide that the matter

be left in adjudication for any

reconsideration by the Commission and

that any communication between the

parties and the Commission take place

on the record.6

The Commission opines that

complaint counsel will be more candid

off the record because they ‘‘will be able

to discuss the case without concern that

their statements might compromise their

litigation position if the case is returned

to adjudication.’’ 7 It also suggests that

the ex parte procedure will confer

similar benefits on ‘‘respondents (and

even third parties).’’ 8 It is unclear to me

why all this candor cannot and should

not take place on the public record.

Traditionally, the Commission acts as

a prosecutor up to and including its

decision to issue an administrative

complaint. As soon as the vote to issue

an administrative complaint is

complete, the Commission assumes a

judicial role with respect to that case,

which then is said to be ‘‘in

adjudication.’’ 9 It should go without

saying that the Commission must not

allow its prosecutorial role to intrude in

any respect in carrying out its

deliberative role in an administrative

adjudication. Removing a matter from

adjudication to chat off the record

suggests that there is something that the

Commission would prefer that the

world not know. It also suggests an

unease on the part of the Commission in

carrying out its judicial function and an

unseemly reluctance to relinquish its

prosecutorial role. Although the

automatic withdrawal provision may

not disadvantage the respondent in any

given proceeding, it may well

undermine public confidence in the

integrity of the Commission’s

adjudicative process.

Let us consider three scenarios

following a court’s denial of a

preliminary injunction: First, complaint

counsel have a strong case,

notwithstanding the court’s denial of a

preliminary injunction. If this is so,

complaint counsel can explain why on

the record. After the case has been

withdrawn from adjudication and

reconsidered, presumably the

Commission will return the case to

adjudicative status. Even if the

respondents initiated withdrawing the

matter from adjudication, the procedure,

in-and-out-and-in adjudication, may

create a perception that complaint

counsel, speaking off the record, had an

unfair advantage. The respondents may

believe that had they only known what

the staff was saying to the Commission

behind closed doors while the case was

withdrawn from adjudication, they

could have defended more effectively

and won a dismissal. After all, the court

gave the first round to the respondents

on the record.

A second scenario is that the case is

weak, and complaint counsel’s

arguments in support of the complaint

are correspondingly weak. The

Commission suggests in its Federal

Register notice that if discussion is held

on the record, complaint counsel will be

inhibited from pointing to weaknesses

in the case for fear that if the

Commission disagrees and requires the

adjudication to go forward, complaint

counsel will be disadvantaged by having

conceded the weaknesses of the case on

the record. An underlying assumption

here is that any weaknesses in the case

will remain undiscovered (by the courts,

by the respondent and by the

administrative law judge), as long as

complaint counsel can confide in the

Commission off the record. Perhaps

more serious, the assumption suggests

an abiding lack of confidence in the

administrative system of adjudication

and the Commission’s place in it.

Complaint counsel will not be able to

avoid the weakness of the case by

confiding that fact in secret to the

Commission. At most, they might

conceal the weakness for a time, a result

that ultimately would be wasteful of

both government and private resources.

Regardless of when during an

adjudicative proceeding complaint

counsel or the Commission itself

discovers a possible weakness in the

case, the Commission should base its

decision whether to continue the

proceeding on publicly available

information.

The new rule may lend itself to a

public perception that the staff of the

Commission has an advantage over

targets of enforcement actions because

the staff has the secret ear of the

Commission. If the staff is permitted

secret access to the Commission, a

decision to continue an adjudication,

particularly one that, based on publicly

available information, appears weak,

likely would suggest that complaint

counsel were able to persuade the

Commission to proceed only by ‘‘hiding

the ball’’ from the respondents. Such a

message hardly is consistent with

fairness to the respondent or with the
Federal Register / Vol. 60, No. 149 / Thursday, August 3, 1995 / Notices 39745

10Off-the-record discussions with the

respondents, followed by dismissal of the

complaint, also may create misperceptions of

unfairness and favoritism, with the implication that

nonpublic communications that could not bear the

light of day influenced the Commission’s decision.

11This assumes that complaint counsel find

themselves unable to make a principled argument

in support of the complaint. See Jose Calimlin,

M.D., Dkt. No. 9199 (June 24, 1986) (‘‘complaint

counsel represent the Commission’s prosecutorial

decision as embodied in the allegations of

complaint and in the notice of contemplated

relief’’); accord R.J. Reynolds Tobacco Co., Dkt. No.

9206 (interlocutory order, Dec. 1, 1986); see also

R.J. Reynolds Tobacco Co. (interlocutory order, Dec.

10, 1986) (purpose of adjudication is ‘‘to subject the

Commission’s complaint to an adversarial test’’).

12See 5 U.S.C. § 552(d); 16 C.F.R. § 4.7.

1As used herein, the term ‘‘merger’’ includes

mergers, acquisitions, joint ventures, and equivalent

transactions.

2Hart-Scott-Rodino Antitrust Improvements Act

of 1976, 15 U.S.C. 18a.

role of the Commission as an unbiased

decisionmaker.10

A third scenario is that the case is

weak, respondents move to withdraw

the matter from adjudication, and

complaint counsel file nothing in

support of the complaint.11 In such an

instance, the Commission may agree

with the respondents and dismiss the

adjudication, or it may disagree and

order that the proceeding continue.

There seems no good reason not to have

this occur on the public record. Again,

private discussions between the

Commission and its staff can create a

public perception of unfairness to the

respondents arising from apparent

complicity between the prosecuting

attorneys and the purportedly impartial

adjudicators—the very danger the

separation of functions requirements of

the Administrative Procedure Act and

the Commission’s ex parte rule are

designed to avoid.12

In addition to undermining the

separation of functions at the

Commission, the new rule limits the

Commission’s discretion to decide when

individual cases should be in

adjudication and remain on the public

record. The exercise of discretion in an

adjudicative matter is a responsibility of

the Commission, not an occasion for

apology. This responsibility, which

must be carried out consistent with the

law and with fundamental fairness,

should not be ceded without a reason

for doing so. Here, I see none. Both the

policy to maintain the separation of

deliberative and prosecutorial functions

and the appearance of having done so

are enhanced when the Commission

retains its discretion to determine the

appropriate disposition of a motion to

withdraw from adjudication. The

shifting of a portion of that discretion in

favor of the respondents may appear

open-minded, but, in the long term, it

will disserve the Commission and the

public interest.

On balance, the Commission and the

public would be better served if the

Commission retained its discretion to

decide which, if any, cases should be

withdrawn from adjudication following

denial of a preliminary injunction. The

new rule is likely to undermine the

integrity of the Commission and its

adjudicative process by breaking down

the wall between the Commission’s

prosecutorial and adjudicatory roles in

a manner inconsistent with the

separation of functions requirement of

the Administrative Procedure Act and

its own ex parte rule.

I dissent.

[FR Doc. 95–19110 Filed 8–2–95; 8:45 am]

BILLING CODE 6750–01–M

Notice and Request for Comment

Regarding Statement of Policy

Concerning Prior Approval and Prior

Notice Provisions in Merger Cases

AGENCY: Federal Trade Commission.

ACTION: Notice of policy statement and

request for public comment.

SUMMARY: The Federal Trade

Commission has adopted a policy

statement regarding the use of prior

approval and prior notice provisions in

Commission orders entered in merger

cases. Under the policy, the

Commission will no longer require prior

approval of certain future acquisitions

in such orders as a routine matter. The

Commission will henceforth rely on the

premerger notification and waiting

period requirements of Section 7A of

the Clayton Act, commonly referred to

as the Hart-Scott-Rodino (HSR) Act, as

the principal means of learning about

and reviewing mergers proposed by

such companies. Narrow prior notice or

approval requirements will be retained

for certain limited situations described

in the Commission’s Statement of

Policy. The Commission also stated that

it would initiate a process for reviewing

the retention or modification of prior

approval requirements in existing

Commission orders.

Although these policies are already in

effect, the Commission is soliciting

comment from interested persons.

DATES: The policy statement was

effective on June 21, 1995. Comments

will be received until September 5,

1995.

ADDRESSES: Comments should be sent to

the Secretary, Federal Trade

Commission, Sixth Street and

Pennsylvania Avenue, NW.,

Washington, DC 20580. Comments will

be entered on the public record of the

Commission and will be available for

public inspection in Room 130 during

the hours of 9 a.m. until 5 p.m.

FOR FURTHER INFORMATION CONTACT:

Daniel P. Ducore, Assistant Director for

Compliance, Bureau of Competition,

(202) 326–2526.

SUPPLEMENTARY INFORMATION: Under

previous Commission policy,

Commission orders entered in merger

cases generally have required that the

respondent obtain the Commission’s

prior approval for certain future

acquisitions in the same market. The

Commission has reassessed that policy

and has determined that prior approval

of future acquisitions by a respondent

should no longer be required as a

routine matter. The Commission has

issued the following Policy Statement as

an exercise of its discretion.

The Commission invites comments on

the issues discussed in this notice, in

the Policy Statement and in the separate

statement of Commissioner Azcuenaga.

Statement of Federal Trade

Commission Policy Concerning Prior

Approval and Prior Notice Provisions

Introduction

Under longstanding Commission

policy, Commission orders entered in

merger cases generally have contained a

requirement that the respondent seek

the Commission’s prior approval for any

future acquisition over a de minimis

threshold within certain markets for a

ten-year period.1 In a few cases, the

Commission also has required prior

notice of intended transactions that

would not be subject to the premerger

notification and waiting period

requirements of section 7A of the

Clayton Act, commonly referred to as

the Hart-Scott-Rodino (HSR) Act.2 Prior

approval and notice requirements are

imposed pursuant to the Commission’s

broad authority to fashion remedies to

prevent the recurrence of

anticompetitive conduct.

In light of its now extensive

experience with the HSR Act, the

Commission has reassessed whether it

needs to continue regularly to impose

prior approval requirements. Although

prior approval requirements in some

cases may save the Commission the

costs of re-litigating issues that already

have been resolved, prior approval

provisions also may impose costs on a

company subject to such a requirement.

Moreover, the HSR Act has proven to be

an effective means of investigating and

challenging most anticompetitive

transactions before they occur.