FTC Investigative-Law Enforcement Authority




A BRIEF OVERVIEW OF
THE FEDERAL TRADE COMMISSION'S INVESTIGATIVE
AND LAW ENFORCEMENT AUTHORITY(1)

Revised, April, 1998


I. INVESTIGATIVE AUTHORITY

A. In General

The Commission may "prosecute any inquiry necessary to its duties in any part of the United States" (FTC Act Sec. 3, 15 U.S.C. Sec. 43) and may "gather and compile information concerning, and * * * investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions * * * Federal credit unions * * * and common carriers * * *." (FTC Act Sec. 6(a), 15 U.S.C. Sec. 46(a)).(2)

B. Specific Investigative Powers

The Commission's specific investigative powers are defined in Sections 6, 9, and 20 of the FTC Act, 15 U.S.C. Secs. 46, 49, and 57b-1, which authorize various forms of compulsory process. In addition, the premerger notification provisions in Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a, prohibit consummation of covered acquisitions until the requested information is provided, thus effectively enabling the Commission to obtain information regarding such acquisitions.

1. Section 9 of the FTC Act

Section 9 of the FTC Act authorizes the Commission to "require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation" (15 U.S.C. Sec. 49). Any member of the Commission may sign a subpoena, and both members and "examiners" (employees) of the agency may administer oaths, examine witnesses, and receive evidence.

Under Commission Rule 2.7 (16 C.F.R. Sec. 2.7), a party may raise objections to a subpoena by filing a petition to quash. Such petitions are resolved by a designated Commissioner, and the designated Commissioner's ruling may thereafter be appealed to the full Commission.

If a party fails to comply with a subpoena (either without filing a petition to quash, or after a duly filed petition is denied), the Commission may seek enforcement of the subpoena in "[a]ny of the district courts of the United States within the jurisdiction of which such inquiry is carried on" (15 U.S.C. Sec. 49). After the Commission files its petition to enforce a subpoena, and following receipt of any response from the subpoena recipient, the court may enter an order requiring compliance. Refusal to comply with a court enforcement order is subject to penalties for contempt of court.

The subpoena provisions of Section 9 are used routinely by the Bureau of Competition to investigate alleged unfair methods of competition and other antitrust violations. Prior to 1980, the Bureau of Consumer Protection also used subpoenas for investigations. However, as the result of the FTC Improvements Act of 1980, which added a new Section 20 of the FTC Act, 15 U.S.C. Sec. 57b-1, the Bureau of Consumer Protection may now use only "civil investigative demands" ("CIDs") to investigate possible "unfair or deceptive acts or practices". By virtue of the FTC Act Amendments of 1994, the Bureau of Competition also may use CIDs (in addition to subpoenas) for investigations of possible antitrust violations.

The scope of a civil investigative demand is different from that of a subpoena. Both subpoenas and CIDs may be used to obtain existing documents or oral testimony. But a CID may also require that the recipient "file written reports or answers to questions" (15.U.S.C. Sec. 57b-1(c)(1)). In addition, Section 20 expressly authorizes the issuance of CIDS requiring the production of tangible things and provides for service of CIDS upon entities not found within the territorial jurisdiction of any court of the Unites States.

As with subpoenas, the recipient of a civil investigative demand may file a petition to quash. Likewise, the Commission may petition a federal district court to enforce the CID in the event of noncompliance, although permissible venue is narrower in a CID enforcement action than in a subpoena enforcement case.

2. Section 6 of the FTC Act

Another investigative tool, this one available in both competition and consumer protection matters, appears in Section 6 of the FTC Act, 15 U.S.C. Sec. 46. 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. As with subpoenas and CID's, the recipient of a 6(b) order may file a petition to quash, and the Commission may seek a court order requiring compliance. In addition, the Commission may commence suit in Federal court under Section 10 of the FTC Act, 15 U.S.C. Sec. 50, against any party who fails to comply with a 6(b) order after receiving a notice of default from the Commission. After expiration of a thirty-day grace period, the defaulting party is liable to a penalty of $110 for each day of noncompliance.

The Commission's 6(b) authority enables it to conduct wide-ranging economic studies that do not have a specific law enforcement purpose. (An example is the "Line-of-Business" study conducted in the 1970's, which required corporations to report line of business profitability and other data on a yearly basis.) Section 6(b) also enables the Commission to obtain answers to specific questions as part of an antitrust law enforcement mere - investigation, where such information would not be available through subpoena because there is no document that contains the answers desired answers. Section 6 also authorizes the Commission to "make public from time to time" portions of the information that it obtains, where disclosure would serve the public interest (15 U.S.C. Sec. 46(f)).

3. Premerger Notification

In merger investigations, the Commission principally relies on Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a, which was added by the Hart-Scott-Rodino Act of 1976. Under Section 7A, the parties to an acquisition of the requisite size must report the transaction to the government and wait a specified number of days before consummation. Should the Commission or the Department of Justice decide that further examination is warranted, they may seek additional information by issuing a so-called "second request". When such a request is issued, the waiting period is extended and the subject acquisition may not be consummated until the conclusion of a specified period following the parties' compliance with the request. Although parties are not technically obligated to comply with a second request, as they are with a subpoena, the price of noncompliance is that consummation of the transaction would be illegal. Thus, the premerger notification provisions of the Clayton Act are a powerful incentive for companies to submit information that the government needs to evaluate corporate acquisitions. Should the parties merge without observing the requirements of the Clayton Act, the Commission may seek both injunctive relief and civil penalties, as appropriate, under Section 7A(g) of the Clayton Act.

4. Section 20 of the FTCA

Under the International Antitrust Enforcement Assistance Act ("IAEA"), the FTC may invoke all of its investigative tools to obtain materials or information from domestic sources for the use of foreign antitrust authorities, and may seek investigative assistance from those authorities, pursuant to mutual or bilateral assistance agreements established under the IAEA. New FTC Act Sections 6(I) and 20(a)(8)(C) incorporate the IAEAA investigative authority into the FTC Act.

II. ENFORCEMENT AUTHORITY

Following an investigation, the Commission may initiate an enforcement action if it finds "reason to believe" that the law is being violated. The Commission uses certain of its statutory powers to enforce both consumer protection and antitrust laws, but there are also important differences that merit separate discussion of the two missions.

A. Consumer Protection

The basic consumer protection statute enforced by the Commission is Section 5(a) of the FTC Act, which provides that "unfair or deceptive acts or practices in or affecting commerce are declared unlawful" (15 U.S.C. Sec. 45(a)(1)).

"Unfair" practices are defined to mean those that "cause[] or [are] 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" (15 U.S.C. Sec. 45(n)). In addition, the Commission enforces a variety of specific consumer protection statutes (e.g., the Equal Credit Opportunity Act, Truth-in-Lending Act, Fair Credit Reporting Act, the Cigarette Labeling Act) that prohibit specifically-defined trade practices and specify that violations are to be treated as if they were "unfair or deceptive" acts or practices under Section 5(a). Summaries of the statutes giving the Commission enforcement powers may be found at http://www.ftc.gov/ftc/legal/htm The Commission enforces the substantive requirements of consumer protection law through both administrative and judicial processes, as described below.

1. Administrative Enforcement

In the administrative process, The Commission makes the initial determination that a practice violates the law, in either an adjudicative or rulemaking proceeding.

(a) Adjudication

Under Section 5(b) of the FTC Act, the Commission may attack "unfair or deceptive practices" (or violations of other consumer protection statutes) through maintenance of an administrative adjudication. When there is "reason to believe" that a law violation has occurred, the Commission may issue a complaint setting forth its charges. If the respondent elects to settle the charges, it may sign a consent agreement (without admitting liability) by which it consents to entry of a final order and waives all right to judicial review. If the Commission accepts such a proposed consent, it places the order on the record for sixty days of public comment before determining whether to make the order final.

Administrative Trials

If the respondent elects instead to contest the charges, the complaint is adjudicated before an administrative law judge ("ALJ") in a trial-type proceeding. The prosecution of a consumer protection matter is conducted by FTC "complaint counsel," who are staff from the Bureau of Consumer Protection or a regional office. Upon conclusion of the hearings, 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 (FTC Act, Section 5(c), 15 U.S.C. Sec. 45(c)). 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.

Enforcing Final Commission Orders

A Commission order (except an order to divest assets) becomes final (i.e., binding on the respondent) 60 days after it is served, unless the order is stayed by the Commission or by a reviewing court. Divestiture orders become final after all judicial review has been completed (or, if no review is sought, after the time for seeking review has elapsed). If a respondent violates a final order, it is liable for a civil penalty of up to $11,000 for each violation. The penalty is assessed by a district court in a suit brought to enforce the Commission's order. The court may also issue "mandatory injunctions" and "such other and further equitable relief" as is deemed appropriate. (FTC Act, Section 5(1), 15 U.S.C. Sec. 45(1)).

Redress After an Administrative Order is Entered

In addition (after all judicial review of its order is complete), the Commission may seek consumer redress from the respondent in district court for consumer Injury caused by the conduct that was at issue in the administrative proceeding. In such a suit, which lies under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b, the Commission must demonstrate that the conduct was such as a n reasonable man would have known under the circumstances was dishonest or fraudulent."

Civil Penalty Enforcement against Non-Respondents

Where the Commission has determined in an adjudicatory proceeding that a practice is unfair or deceptive and has issued a cease and desist order that is no longer subject to judicial review, the Commission may also obtain civil penalties from non-respondents who thereafter violate the standards articulated by the Commission. To accomplish this, the Commission must show that the violator had "actual knowledge that such act or practice is unfair or deceptive and is unlawful" under Section 5(a)(1) of the FTC Act. (FTC Act, Section 5(m)(1)(B); 15 U.S.C. Sec. 45(m)(1)(B)). To prove "actual knowledge," the Commission typically shows that it had provided the violator with a copy of the Commission determination in question, or a "synopsis" of that determination. The virtue of Section 5(m)(1)(B) is that it limits wrongdoers to only a single bite of the apple before they are subject to monetary penalties.

(b) Rulemaking

In lieu of attacking unfair or deceptive practices by administrative adjudications against individual respondents, the Commission may use trade regulation rules to remedy unfair or deceptive practices that occur on an industry-wide basis. Under Section 18 of the FTC Act, 15 U.S.C. Sec. 57a, the Commission is authorized to prescribe "rules which define with specificity acts or practices which are unfair or deceptive acts or practices in or affecting commerce within the meaning of Section 5(a)(1) of the Act. The statute requires that Commission rulemaking proceedings involve informal hearings at which interested parties are accorded limited rights of cross examination. Before commencing a rulemaking proceeding the Commission must also have reason to believe that the practices to be addressed by the rulemaking are "prevalent" (15 U.S.C. Sec. 57a(b)(3)).

Once the Commission has promulgated a rule, anyone who violates the rule "with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule" is liable for civil penalties of up to $11,000 per violation. The Commission obtains such penalties by filing a suit in district court under Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. Sec. 45(m)(1)(A). In addition, any person who violates a rule (irrespective of the state of knowledge) is liable for injury caused to consumers by the rule violation. The Commission may pursue such recovery in a suit for consumer redress under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b.

2. Judicial Enforcement

As the preceding section illustrates, even where the Commission determines through adjudication or rulemaking that a practice is unfair or deceptive, the Commission must still seek the aid of a court to obtain civil penalties or consumer redress for violations of its orders to cease and desist or trade regulation rules. In this section, we discuss the Commission's ability to challenge a practice directly in court, without first making a final agency determination that the challenged conduct is unlawful.

Section 13(b) of the FTC Act, 15 U.S.C. Sec. 53(b), authorizes the Commission to seek preliminary and permanent injunctions to remedy "any provision of law enforced by the Federal Trade Commission." Under the first proviso of Section 13(b), whenever the Commission has "reason to believe" that any party "is violating, or is about to violate" a provision of law enforced by the Commission, the Commission may ask the district court to enjoin the allegedly unlawful conduct, pending completion of an FTC administrative proceeding to determine I whether the conduct is unlawful. Further, under the second I proviso of Section 13(b), the Commission may seek, and "in proper l cases n the court- may grant, a permanent injunction.

Section 13(b) was added to the FTC Act as part of amendments to the Trans-Alaska Pipeline Act of 1973. At the time, the provision was expected to be used principally for obtaining preliminary injunctions against corporate acquisitions, pending completion of FTC administrative hearings. During the 1970's, Section 13(b) was used by the Commission mainly in this way, and the Commission continues to make frequent use of the provision in its merger enforcement program. However, on occasion in the 1970's, the Commission also used the "preliminary injunction" provision of Section 13(b) to obtain injunctions against ongoing campaigns of deceptive advertising, pending a final FTC adjudication. (Section 13(a) of the Act, passed in 1938, had previously authorized the Commission to seek injunctive relief in cases of false advertisements for "food, drugs, devices, or cosmetics.")

In the early and mid-1980's the Commission began to make widespread use of the "permanent injunction" proviso of Section 13(b) in its consumer protection program to challenge cases of garden variety fraud and deception. Further, the Commission argued that the statutory reference to "permanent injunction" entitled the Commission to obtain an order not only permanently barring deceptive practices, but also imposing various kinds of monetary equitable relief (i.e., restitution and rescission of contracts) to remedy past violations. The Commission also successfully argued that, to preserve the possibility of ultimate monetary equitable relief, it should be able to obtain a freeze of assets and imposition of temporary receivers in appropriate cases.

The courts have uniformly accepted the Commission's construction of Section 13(b), with the result that most consumer protection enforcement is now conducted directly in court under [Section 13(b), rather than by means of administrative adjudication. A suit under Section 13(b) is preferable to the adjudicatory process outlined above because, in a suit under Section 13(b), the court may award both prohibitory and monetary equitable relief in one step, whereas when the Commission proceeds by administrative adjudication, it must bring a subsequent suit against the respondent under Section 19 to obtain I consumer redress. In addition, a judicial injunction becomes effective immediately, while a Commission cease and desist order takes effect only 60 days after service.

Of course, adjudication offers certain advantages over direct judicial enforcement. In particular, in an adjudicatory proceeding, the Commission has the first opportunity to make factual findings and articulate the relevant legal standard. On review, the court is obliged to affirm the Commission's findings of fact if supported by substantial evidence. A reviewing court must also accord substantial deference to constructions of the FTC Act articulated by the Commission in adjudication or rulemaking. In a 13(b) suit, by contrast, the Commission receives no greater deference than would any government plaintiff. Thus, where a case involves novel legal issues or fact patterns, the Commission has tended to prefer administrative adjudication.

B. Antitrust

The Commission enforces various antitrust laws through its Bureau of Competition. The two most significant statutory provisions are Section 5(a) of the FTC Act and the Clayton Act. Section 5(a) of the FTC Act, 15 U.S.C. Sec. 45(a), prohibits, inter alia, "unfair methods of competition." Unfair methods of competition include any conduct that would violate the Sherman Antitrust Act. The Clayton Act prohibits corporate acquisitions that may tend substantially to lessen competition (Section 7, 15 U.S.C. Sec. 18) and also bars certain forms of price discrimination (Section 2 of the Robinson Patman Act, 15 U.S.C. Secs. 13-13b). As with its consumer protection responsibilities, the Commission uses both administrative and judicial remedies to enforce the law.

1. Administrative Enforcement

a. Adjudication

The Commission may challenge alleged "unfair methods of competition," as it does "unfair or deceptive acts or practices,'' by commencing an administrative adjudicatory proceeding under Section 5(b) of the FTC Act. Where a violation of the Clayton Act is alleged, the Commission proceeds under Section 11 of the Clayton Act (15 U.S.C. Sec. 21), which parallels Section 5(b) of the FTC Act in authorizing adjudicatory proceedings. Procedures for judicial review of FTC antitrust orders are the same as those for review of consumer protection orders. Likewise, violators of antitrust orders are subject to suit for civil penalties under FTC Act Section 5(1) or Clayton Act Section 11(1), as appropriate.

b. Rulemaking

Section 18 of the FTC Act, which authorizes the promulgation of trade regulation rules, applies only to "unfair or deceptive acts or practices." Whether the Commission has authority to promulgate rules that define "unfair methods of competition" is an open question. Prior to enactment of Section 18, the Commission asserted that it had rulemaking authority by virtue of Section 6(g), which authorizes the Commission "to make rules and regulations for the purpose of carrying out the provisions of this subchapter." However, nearly all of the rules that the Commission actually promulgated under Section 6(g) were consumer protection rules. In 1975, Section 18 became the exclusive rulemaking provision for consumer protection cases. The Commission has not attempted a competition rulemaking since Section 18 took effect. In any event, the only sanction for violating a rule issued under Section 6(g) would be entry of an administrative order, or a judicial injunction, prohibiting future violations, not the civil penalties that attach to violations of a trade regulation rule issued under Section 18.

2. Judicial Enforcement

As discussed above, Section 13(b) empowers the Commission to obtain preliminary and permanent injunctive relief for violations of any provision of law that the Commission enforces. In the competition context, the Commission has used Section 13(b) primarily for the purpose of obtaining preliminary injunctive relief against corporate acquisitions pending completion of an FTC administrative proceeding. The Commission ordinarily does not seek permanent injunctions in competition cases, preferring to retain for itself the adjudication of the merits in such matters. There is, however, no legal reason why the Commission could not obtain permanent injunctive relief against an antitrust violation in an appropriate case, and perhaps also restitution for injury suffered by consumers (e.g., the refund of overcharges attributable to price-fixing). In the one litigated competition case in which the Commission sought a permanent injunction, the district court held that it was empowered to award restitution, but ultimately dismissed the case on the merits.

III. LITIGATING AUTHORITY

The preceding sections have described a variety of actions that may be pursued in federal court against violators of the laws enforced by the Commission. The Commission has independent authority to litigate some of these cases in its own name, by its own attorneys. The scope of this authority is described below.

Except as otherwise provided by law, the Attorney General is responsible for the conduct of all litigation in which the United States, or one of its agencies, is a party (28 U.S.C. Sec. 516). Section 16 of the FTC Act, 15 U.S.C. Sec. 56, specifically authorizes the Commission to represent itself by its own attorneys in four categories of cases: (1) suits for injunctive relief under Section 13 of the FTC Act, 15 U.S.C. Sec. 53; (2) suits for consumer redress under Section 19 of the FTC Act, 15 U.S.C. Sec. 57b; (3) petitions for judicial review of FTC rules or orders; and (4) suits to enforce compulsory process under Sections 6 and 9 of the FTC Act, 15 U.S.C. Secs. 46 and 49.3(3)

In addition to defining four classes of cases in which the Commission may automatically represent itself, Section 16 also provides that with respect to "any civil action involving this subchapter (including an action to collect a civil penalty)," the Commission may represent itself if the Attorney General does not agree to do so after 45-days notice. See 15 U.S.C. Sec. 56(a)1. This catchall provision enables the Commission to prosecute and defend by its own attorneys a wide variety of cases that the Department of Justice declines to litigate (particularly civil penalty actions under Sections 5(1) and 5(m) of the FTC Act).

Separate rules govern representation before the Supreme Court. Section 16(a)(3), 15 U.S.C. Sec. 56(a)(3), defines certain circumstances under which the Commission may appear in the Supreme Court "in any civil action in which the Commission represented itself [in the courts below] pursuant to [15 U.S.C. 56(a)(1) or (2)." Specifically, the Commission may represent itself if it requests authority to do so from the Solicitor General within 10 days of the lower court judgment, and the Solicitor General, within 60 days after entry of the judgment, either authorizes the Commission's appearance, declines to represent the Commission, or fails to respond to the request.(4)

In addition to these specific grants of representational authority, there are several situations in which the Department of Justice may appoint Commission attorneys as special United States Attorneys to represent the United States in litigation conducted by the Department of Justice. See Telemarketing and Consumer Fraud and Abuse Prevention Act, Sec. 9, Pub. L. No. 103297, 108 Stat. 1545 (1994) (appointment of Commission attorneys to prosecute criminal contempt); Memorandum of Agreement Between the Department of Justice and the Federal Trade Commission - Premerger Penalties, 4 Trade Reg. Rep. 1 9853 at p. 17,356 (appointment of Commission attorneys to prosecute civil penalty actions under 15 U.S.C. Sec. 18a(g)(1) for violation of premerger reporting requirements); see also 28 U.S.C. Secs. 515, 543 appointment of special United States attorneys).


APPENDIX A

SYNOPSIS OF
ANTITRUST ENFORCEMENT AUTHORITY

STATUTE

FEDERAL
TRADE
COMMISSION

DEPARTMENT
OF
JUSTICE

STATE
ENFORCEMENT
AUTHORITIES

PRIVATE
PARTIES

FEDERAL TRADE
COMMISSION ACT
(15 U.S.C. § 41 et seq.)

- Injunctive Relief

- Redress

- Rulemaking

- Civil Penalties

- Criminal Penalties

- administrative cease and desist authority [§ 5(b) FTCA]

- judicially ordered injunctive relief [§ 13(b) FTCA; also § 5(l) FTCA (for violations of cease and orders)]

- judicially ordered redress [§ 13(b) FTCA]

- [§ 6(g) FTCA]

- judicially ordered civil penalties for violating cease and desist orders ($11,000 per violation) [§ 5(l) FTCA]

- referral to U.S. Department of Justice [§ 16(b) FTCA]

- prosecution [§§ 1 & 2 Sherman Act]    
         
CLAYTON ACT (15 U.S.C. § 12 et seq.)

- Injunctive Relief

- Damages

- Civil Penalties

- Criminal Fines

- administrative cease and desist authority [§ 11(b) Clayton Act]

- judicially ordered injunctive relief [§ 13(b) FTCA; also § 7A(g)(2) Clayton Act (for HSR reporting violations) and § 11(l) Clayton Act (for violations of cease and desist orders)]

- judicially ordered civil penalties for violating cease and desist orders ($5,000 per violation) [§ 11(l) Clayton Act; also § 7A(g)(1) Clayton Act ($11,000 per day for HSR reporting violations)]

- judicially ordered injunctive relief [§ 15 Clayton Act; also § 7A(g)(2) Clayton Act (for HSR reporting violations)]

- may recover for injuries sustained by the United States Government (treble damages) [§ 4A Clayton Act]

- judicially ordered civil penalties [§ 7A(g)(1) Clayton Act ($11,000 per day for HSR reporting violations)]

- officer liability for corporate violation of penal provisions [§ 14Clayton Act]

- may apply to the courts as parens patriae for injunctive relief [§ 16 Clayton Act]

- may apply fortreble damages as parens patriae [§ 4C Clayton Act]

- may apply to the courts for injunctive relief [§ 16 Clayton Act]

- may apply for treble damages [§ 4 Clayton Act]

         
SHERMAN ANTITRUST ACT (15 U.S.C. § 1 et seq.)

- Injunctive Relief

- Damages

- Criminal Penalties

- Miscellaneous

  - judicially ordered injunctive relief [§ 4 Sherman Act]

- may recover for injuries sustained by the United States Government (treble damages) [§ 4A Clayton Act]

- combinations [§ 1 Sherman Act]

- monopolization [§ 2 Sherman Act]

- forfeiture [§ 6 Sherman Act]

- may apply to the courts as parens patriae for injunctive relief [§ 16 Clayton Act]

- may apply for treble damages as parens patriae [§ 4C Clayton Act]



- may apply to the courts for injunctive relief [§ 16 Clayton Act]

- may apply for treble damages [§ 4 Clayton Act]


APPENDIX B

SYNOPSIS OF
CONSUMER PROTECTION ENFORCEMENT AUTHORITY
UNDER THE FEDERAL TRADE COMMISSION ACT

 

STATUTE

FEDERAL
TRADE
COMMISSION

DEPARTMENT
OF
JUSTICE

STATE
ENFORCEMENT
AUTHORITIES

PRIVATE
PARTIES

FEDERAL TRADE COMMISSION ACT (15 U.S.C. § 41 et seq.)

- Injunctive Relief

- Rulemaking

- Redress

- Civil Penalties

- Criminal Penalties

- administrative cease and desist authority [§ 5(b) FTCA]

- judicially ordered injunctive relief [§ 13(b) FTCA; also § 13(a) FTCA (for violations of § 12(a) FTCA) and § 5(l) FTCA (for violations of cease and desist orders)]

- [§ 18 FTCA]

- judicially ordered redress [§ 13(b) FTCA; also § 19(a)(1) FTCA (for rule violations) and § 19(a)(2) FTCA (for "fraudulent or dishonest" conduct)]

- judicially ordered civil penalties for violating cease and desist orders ($11,000 per violation) [§ 5(l) FTCA; also § 5(m)(1)(A) FTCA (for violations of trade regulation rules) ($11,000 per violation) and § 5(m)(1)(B) FTCA (for violations of adjudicatory holdings by non-parties) ($11,000 per violation)]

- referral to U.S. Department of Justice [§ 16(b) FTCA]

- prosecution for violations of  Sec. 12(a) FTCA [§ 14 FTCA]    

1. This memo focuses exclusively on law enforcement by the Federal Trade Commission. Appendices A and B are charts that synopsize the allocation of antitrust and consumer protection powers to the Commission and to other entities, i.e., the Department of Justice, state enforcers, and private parties. Appendix B covers only the Federal Trade Commission Act. Summaries of Commission enforcement authority under other statutes may be found at http://www.ftc.gov/ftc/legal.htm.

2. "Corporation" is defined to include any company, trust or association, incorporated or unincorporated, "which is organized to carry on business for its own profit or that of its members (FTC Act Sec. 4, 15 U.S.C. Sec. 44).

3. Section 16, added to the FTC Act in 1975, does not specifically mention suits to enforce Civil Investigative Demands, as CID authority was not added to the Commission's investigatory repertoire until 1980. However, Section 20 of the FTC Act, which governs issuance of CID's, provides that a suit to enforce a CID may be prosecuted by the Commission "through such officers or attorneys as it may designate" (15 U.S.C. Sec. 57b-2(e)). The only other statute that expressly vests the Commission with representational authority is the Clayton Act, which provides that injunctive relief for violations of the premerger notification requirements may be granted by a district court "upon application of the Federal Trade Commission or the Attorney General" (15 U.S.C. Sec. 18a(g)(2)).

4. On three of the four occasions in the 1980's in which the Commission was party to a case before the Supreme Court, it was represented by its own attorneys. In two of those cases, the Commission obtained a grant of certiorari after the Solicitor General had declined to file a petition on the Commission's behalf.

 

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