Antitrust Law Daily FTC testimony before Senate appropriations subcommittee highlights competition, consumer protection efforts
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Tuesday, May 7, 2019

FTC testimony before Senate appropriations subcommittee highlights competition, consumer protection efforts

By Peter Reap, J.D., LL.M.

FTC Chairman Joseph J. Simons, in testimony before the Senate Appropriations Subcommittee on Financial Services and General Government, testified on the agency’s efforts to protect consumers and promote competition.

Simons noted that the FTC’s jurisdiction includes privacy and data security, consumer fraud, mergers and acquisitions, and anticompetitive tactics by pharmaceutical and other companies. In 2020, the FTC is requesting $312.3 million and 1,140 FTEs. The increase of $2.6 million over the FY2019 appropriation is for expert witnesses and IT modernization, according to Simons’ prepared remarks.

During FY 2018, the FTC returned over $83 million in redress to consumers and deposited over $10 million into the U.S. Treasury, reflecting collections in both consumer protection and competition matters, the testimony states. In addition, Commission actions required defendants to self-administer refund programs worth more than $1.6 billion during FY 2018.

As the nation’s primary consumer protection agency, the FTC has a broad mandate to protect consumers from unfair or deceptive acts or practices in the marketplace, and to educate consumers and businesses about their rights and responsibilities, according to the testimony.

The FTC has expanded its focus on privacy to reflect the growing collection, use, and sharing of consumer data in the commercial marketplace, and has aggressively pursued privacy and data security cases. As part of its mission to protect consumers, the agency’s fraud program tracks down and stops some of the most egregious scams that prey on U.S. consumers, including defendants who blast consumers with illegal robocalls, operate sham charities, or deceptively pose as the government or well-known tech companies. The agency also has brought cases challenging false and unsubstantiated health claims, including those targeting older consumers and individuals affected by the opioid crisis.

Antitrust enforcement. The FTC also enforces U.S. antitrust law in many sectors that directly affect consumers and their wallets, such as health care, consumer products and services, technology, manufacturing, and energy, the testimony states. In FY 2018, the Commission took enforcement actions against 22 different mergers. Most were resolved through a consent decree, but the agency challenged five mergers in court. The Commission also has continued its decades-long efforts to fight anticompetitive conduct in the pharmaceuticals and health care industries, the testimony notes. Last month, the Commission filed a complaint against health information company Surescripts, alleging that it illegally maintained its monopolies over two electronic prescribing markets.

Simons faced questions about the FTC’s enforcement efforts from the senators.  With respect to antitrust enforcement, Simons said: “Our policy is to stop anticompetitive conduct and anticompetitive mergers that either result in price increases, reductions in product quality, which would include privacy, and reductions in innovation.”

Senator Van Hollen (D., Md.) asked Simons to explain what the agency was doing about the imposition of noncompete agreements on employees. Simons explained that the agency is having its Bureau of Economics conduct a review of the economic evidence of the impact of these types of clauses. The literature review should be done in a matter of months, according to Simons. If the evidence provides a basis for a rulemaking, then a rulemaking could happen in the months after that. Simons noted that it will take more time, however, if the agency needs to develop the evidence.

Consumer protection efforts. On the consumer protection front, Simons was asked about credit rating agencies. Senate Appropriations Committee Financial Services and General Government Subcommittee Chairman John Kennedy (R., La.) said that credit rating agencies need to do a better job about assisting consumers with correcting inaccurate information about the consumer and suggested that the FTC should sit down with these companies to find a solution. Simons said that FTC was talking with the Consumer Financial Protection Bureau to conduct a workshop that would address these issues.

The FTC chairman also noted that in an effort to combat robocalls the agency would like authority to go after common carriers, particularly those that cater to robocall operations. Kennedy asked Simons to provide the names of these carriers. Simons said that, although his agency does not have jurisdiction over these companies, he would check with his staff to see if they could provide the names to the senator.

In addition to legislation providing the FTC with jurisdiction over common carriers, the agency continues to seek jurisdiction over non-profits, according to Simons. The FTC chairman also noted the agency’s continued desire to have civil penalty authority. With data security cases, the ability to get monetary relief is limited under the agency’s current authority.

Technology Task Force. In an effort to more closely monitor developments in the technology sector, as described in the testimony, the FTC’s recently announced Technology Task Force will examine industry practices, conduct law enforcement investigations, and coordinate and consult with staff throughout the FTC on technology-related matters, including prospective merger reviews and reviews of consummated technology mergers.

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