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SUMMARY
The Federal Trade Commission (FTC) is
charged with protecting consumers from
fraud, deception, and unfair practices in
the marketplace. The agency addresses
current issues of importance to consumers, including identity theft, telemarketing fraud, Internet fraud, and credit
reporting. The FTC uses targeted law
enforcement actions and consumer and
business education to protect the public.
We work to ensure that consumers have
accurate information for their purchasing
decisions, and can have confidence in the
traditional and electronic marketplaces.
The FTC also has a long tradition of
maintaining a competitive marketplace for
both consumers and businesses. We
enforce the laws that prohibit anticompetitive mergers and business practices.
Free and open competition is the
cornerstone of our economy, bringing
consumers the benefits of low prices, high
quality products and services, and innovation. We work to remove restrictions
on the engine of competition so that
markets can function at their best. We
focus particularly on market segments that
matter most to consumers: health care,
prescription drugs, grocery retailing, high
tech, and energy. By promoting vigorous
competition in these and other markets,
we can help to ensure a strong economy.
Our educational materials, as well as
information about the FTC’s activities, can
be found on our Web site, www.ftc.gov.

About the FTC
The FTC is an independent agency that
reports to Congress on its actions. It is
headed by five Commissioners, nominated
by the President and confirmed by the
Senate, each serving staggered seven-year

terms. The President selects one Commissioner to act as Chairman. No more
than three Commissioners can be of the
same political party. The FTC has two
major bureaus, Consumer Protection and
Competition, supported by the Bureau of
Economics and regional and mission
support offices.
The Bureau of Consumer Protection’s
charge is to protect consumers against
fraudulent, deceptive, or unfair practices.
This Bureau enforces a variety of
consumer protection and credit laws
enacted by Congress, as well as trade
regulation rules issued by the Commission. Its actions include individual
company and industry-wide investigations,
administrative and federal court litigation,
rulemaking proceedings, and consumer
and business education.
The FTC’s antitrust arm, the Bureau of
Competition, seeks to prevent antic o m p e t i t i ve
mergers
and
o t h er
anticompetitive business practices in the
marketplace. This Bureau promotes consumers’ freedom to choose goods and
services in a competitive marketplace at
price and quality levels that fit their needs.
It also fosters opportunity for businesses
by ensuring competitive markets.
The Bureau of Economics helps the two
mission bureaus evaluate the economic
impact of their actions. To do so, this
Bureau provides economic analysis and
support to antitrust and consumer
protection investigations and rulemakings.
It also analyzes the impact of government
regulation on competition and consumers
and provides Congress, the Executive
Branch, and the public with economic
analysis of market processes as they relate
to antitrust, consumer protection, and
regulation.

The mission support offices consist of
management and administrative functions;
these offices provide needed services to
support the operations of the agency.

The FTC’s regional offices cover seven
geographic areas. The regional offices work
with the Bureaus of Consumer Protection
and Competition to conduct investigations
and litigation; provide advice to state and
local officials on the competitive implications of proposed actions; recommend
cases; provide local outreach services to
consumers and business persons; and
coordinate activities with local, state, and
regional authorities. FTC regional offices
frequently sponsor conferences for small
businesses, local authorities, and
consumer groups.

Strategic Plan
Our Strategic Plan sets forth the FTC’s
Vision and Mission with respect to two
goals. These goals, and their corresponding objectives (see Figure 1), are the
framework for the activities we pursue
during the course of each year. Our
performance measures help us assess the
impact of our annual activities.

FIGURE 1

FTC’S STRATEGIC PLAN
VISION:

A U.S. economy characterized by vigorous competition among producers and consumer access to accurate
information, yielding high quality products at low prices and encouraging efficiency, innovation, and
consumer choice.

MISSION:

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.

GOAL 1

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

GOAL 2

Prevent anticompetitive mergers and
other anticompetitive business
practices in the marketplace.

OBJECTIVE 1.1

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

OBJECTIVE 2.1

Identify anticompetitive mergers and
practices that cause the greatest
consumer injury.

OBJECTIVE 1.2

Stop fraud, deception, and unfair
practices through law enforcement.

OBJECTIVE 2.2

Stop anticompetitive mergers and
practices through law enforcement.

OBJECTIVE 1.3

Prevent consumer injury through
education.

OBJECTIVE 2.3

Prevent consumer
education.

2

injury through

C

Facilitating consumers’ access to
important medications - including
taking actions resulting in the preservation of ongoing development of
new drugs, blocking collusion among
competitors, and removal impediments
to the tim ely availability of lower-cost
generic drugs.

C

Identifying approximately 200 firms
engaging in pretexting, a practice
through which companies obtain and
sell consumers’ asset or bank account
information to third parties. Firms were
sent letters warning them to discontinue this privacy-related violation;
we followed up by filing complaints in
federal court charging some companies
with continuing this practice despite
the warning.

C

Bringing the first cases enforcing the
new ly effective Children’s Online
Privacy Protection Rule that protects
children under the age of 13; defendants paid fines totaling $100,000.

C

Securing a settlement to protect competition in the growing broadband
market for Internet services.

C

2001 Highlights

Expanding outreach to consumers by
launching two new Web sites to collect
and share consu me r com plaint
information: Public Sentinel, to provide
the public with consumer fraud and
iden tity theft trend data and
information; and www.econsumer.gov,
to enhance consumer protection and
confidence in global e-commerce. In
addition, the FTC is in the process of
launching another Web site, Soldier
Sentinel, to permit military service
mem bers to enter consumer complaints and receive education materials
online.

During 2001, the FTC’s activities
benefitted consumers and businesses. We
were successful in achieving or exceeding
the majority of the performance targets we
use to measure our effectiveness. Highlights of our 2001 results include:
C

Saving consumers an estimated $3.1
billion1 through law enforcement
actions – a savings of over $21 for each
$1 appropriated for FTC operations. In
addition, the FTC’s law enforcement
activities and consumer education
efforts deter many fraudulent or
anticompetitive practices that likely
result in substantial, though unmeasurable, consumer savings.

C

Using the more than 430,000 consumer complaints we received in 2001
to target our law enforcement and
education efforts to the most serious
problems affecting consumers, and
sharing these complaints with over 400
law enforcement partners.

C

C

Providing access to the 131,000
identity theft complaints and inquiries
to more than 235 law enforcement
mem bers to help them identify and
target the most serious consumer
problems in this area.
Saving consumers more than $2 billion
dollars on fuel and utility bills through
merger enforcement actions involving
gasoline and other petroleum products,
and electricity and natural gas transmission.

1

A preliminary consumer savings estimate of
$3.3 billion was included in the FY 2003
Congressional Budget Justification materials.
However, after a final reconciliation of the data,
the final consumer savings estimate is $3.1
billion.

3

lic. Our internal control review program,
along with our Inspector General’s audits
and other independent reviews, plays a
significant role in ensuring effective and
responsive agency operations.

The FTC’s 2001 performance provided
s i g n if ic a n t b e n e f i t s
to
American
consumers, and the cost of the agency’s
operations is a sound investment for
consumers and businesses. We effectively
manage our resources and serve the pub-

Figure 2

FY 2001 Performance Measures and Targets
G OAL 1

G OAL 2

OBJECTIVE 1.1
Measure 1.1.1: Annual number of
consumer complaints and inquiries
entered into database.
Target: 350,000
Actual: 430,000 T

OBJECTIVE 2.1
Measure 2.1.1: Percent of HSR second
requests resulting in enforcement action.
Target: 50%
Actual: 68% T
Measure 2.1.2: Number of nonmerger
investigations opened per year.
Target: 45-70
Actual: 56 T

OBJECTIVE 1.2
Measure 1.2.1: Dollar savings for
consumers from FTC actions which stop
fraud.
Target: $400 million
Actual: $487 million T
Measure 1.2.2: Total expenditures of
deceptive or unfair advertising campaigns
stopped.
Target: $300 million
Actual: $86 million

OBJECTIVE 2.2
Measure 2.2.1: Positive outcome of cases
brought by FTC due to alleged violations.
Target: 80%
Actual: 94% T
Measure 2.2.2: Dollar savings for consumers
resulting from FTC actions stopping
anticompetitive mergers.
Target: $800 million
Actual: $2.5 billion T
Measure 2.2.3: Dollar savings for consumers
resulting from FTC actions stopping
anticompetitive nomerger activity.
Target: $200 million
Actual: $157 million

OBJECTIVE 1.3
Measure 1.3.1: Number of education
publications distributed to or accessed
electronically by consumers.
Target: 10 million
Actual: 15 million T

OBJECTIVE 2.3
Measure 2.3.1: Quantify number of
education and outreach efforts.
Determine baseline
Measure 2.3.2: Quantify number of hits on
antitrust information on FTC Web site.
Determine baseline

T met or exceeded target

4

fraud and one for our other law
enforcement or nonfraud efforts. The
former is our key consumer protection
measure (1.2.1). Our 2001 target was to
save consumers over $400 million by
stopping fraud. We surpassed this target,
with our actions saving consumers an
estimated $487 million. Our five-year goal
for the period 2001-2005 is to save
consumers $2 billion, or an average of
$400 m illion per year.

2001 Assessment –
Measuring Performance
Through Results
A major feature of our strategic
planning process is the continual
reevaluation of our objectives, performance
measures, and performance targets. This
process gives us the opportunity to assess
our impact on the marketplace and
evaluate how well we are doing our job of
protecting the American consum er. It also
allows us to determine if our measures are
accurate indicators of the results of our
performance (see Figure 2).

Performance measure (1.2.2) addresses
the law enforcement efforts to stop
deceptive or unfair practices. In 2001, a
new measure was used that looks at the
value of the deceptive or unfair advertising
campaigns we are able to stop. Our target,
based on our year 2000 results, was to
reduce consumer injury by stopping
campaigns that had combined media
expenditures totaling $300 million.
However, we stopped only $86 million of
expenditures of deceptive or unfair advertising campaigns in 2001, or 29% of our
target, which led us to re-examine the
measure and the target. We found that the
base year 2000 included final orders
halting several large national advertising
campaigns. However, in 2001, nearly half
of our advertising cases with final orders
involved companies that used the Internet
or other low-cost alternatives to conduct
advertising campaigns. After studying
these results and advertising trends in
general, we have reset our target to $100
million in 2002. Through our continuous
self-evaluation process, we will closely
monitor this area and explore whether
there are other measures that will allow us
to more effectively evaluate our impact in
the nonfraud area, including our efforts to
protect consum ers’ privacy.

As previously discussed, our Strategic
Plan is based upon two goals: preventing
fraud, deception, and unfair business
practices in the marketplace (Consumer
Protection), and preventing anticom petitive mergers and other anticompetitive
business practices in the marketplace
(Maintaining Competition). We have developed measures for both of our goals and
their corresponding objectives.
Under Goal 1, the results of our efforts
under the first objective are measured by
the number of consumer complaints and
inquiries added to the Consumer Information System database (Measure 1.1.1). The
more data we have, the better able we can
effectively spot wide-ranging trends,
quickly identify emerging scams, and
efficiently coordinate activities with other
law enforcers. In 2001, we added more
than 430,000 entries, exceeding our target
of 350,000 by approximately 23%. This
growth reflects the increasing interest of
organizations in contributing complaint
data to our database, which gives us a
broader view of what consumers are
experiencing.

Under the third consumer protection
objective, we measure our impact by tracking the number of consumer and business
education publications we distributed to
the public (Measure 1.3.1). Tracking the
distribution of publications in response to

The second consumer protection objective has two measures, one for our law
enforcement efforts related to stopping

5

met our target, opening 56 investigations,
more than double the 25 investigations
opened in 2000.

consumer requests gives us an approximate idea of how many consumers believe
our information will prove useful. In 2001,
the FTC distributed approximately 15
million publications: 5.4 million print publications and 9.6 million through the FTC
Web site. This is the second year in which
electronic distribution surpassed print distribution. We exceeded our goal of 10
million publications by approximately 5
million, due primarily to an unexpected
increase in the number of publications
accessed online. Our reach nationwide was
extended by aggressive outreach and
promotion of FTC materials and our tollfree num bers.

For the second objective, we use three
measures to gauge our success in stopping
anticompetitive mergers and practices
through law enforcement. The first
(Measure 2.2.1) addresses the percentage
of anticompetitive mergers and practices in
which we achieved relief through litigation,
reached a successful settlement agreement, or persuaded parties not to proceed
with an anticompetitive acquisition. We
seek to obtain a positive result in at least
80% such matters in which we determine
that a merger or a course of conduct is
anticompetitive. We were able to exceed
our goal in 2001, by achieving a positive
result in approximately 94% of the matters
in which we identified an antitrust
problem. While we expect to prevail nearly
all the time in our enforcement actions, we
remain willing to undertake challenging
cases that may result in losses.

Under Goal 2, we adopted a new
measure under the first Maintaining Competition objective (Measure 2.1.1) that
allows us to evaluate our effectiveness in
screening HSR premerger notification
filings to identify those that most likely
present antitrust concerns. Success in this
measure benefits consumers by targeting
resources toward transactions most likely
to have anticompetitive effects. Our preliminary target was that at least 50% of
HSR requests for additional information
would result in enforcement action. We
exceeded that figure, with enforcement
actions taken in 68% of the HSR investigations. We will continue to evaluate
our target for this measure, and will make
appropriate adjustments based on our
ongoing experience.

Within the last year, we increased our
annual target for dollar savings to consumers resulting from FTC merger actions
(Measure 2.2.2) from $500 million to $800
million. In 2001, we saved consum ers
approximately $2.5 billion, keeping us well
on course to achieve our goal of $4 billion
in direct savings to consumers over the
five-year period 2001-2005. In addition, we
added a new performance m easure in
2001 relating to consumer savings
resulting from FTC nonmerger enforcement actions (Measure 2.2.3). Our goal for
this measure is to achieve $1 billion in
direct savings to consumers over the fiveyear period 2001-2005 by stopping anticompetitive practices that would result in
higher consumer prices if allowed to
continue. Meeting the five-year goal
requires an average of $200 million per
year in consumer savings. In 2001, we
saved consumers $157 million. Although
the 2001 result is somewhat less than the
yearly average of $200 million needed to

The second measure under this objective (Measure 2.1.2) - the number of
nonmerger investigations opened per year
- helps us assess our efforts to broaden
our identification of anticompetitive conduct in the market. Our goal has been to
open 45 to 70 nonmerger investigations
over the course of each year, a range
reflecting the number of nonmerger
investigations opened in years prior to
2000, when we diverted resources away
from nonmerger work to respond to an
unprecedented level of merger activity. We
6

tinues to be successful in protecting consumers, we face challenges in this
complex, high-tech, global marketplace.
Emerging issues such as enforcing the
promises made to consumers about the
privacy of their personal information and
maintaining competition among companies
operating in this expanding marketplace
have risen to the forefront.

achieve the five-year goal, we expect to
reach the five-year goal by achieving
greater savings in subsequent years.
Together, consumer savings resulting
from merger and nonmerger enforcement
represent our key maintaining competition
measures. Actual results in any given year
may vary based on the level of merger
activity taking place, the nature of the
transactions, and the industries in which
we identify antitrust concerns. In 2001,
our merger and nonmerger enforcement
actions saved consumers a total of about
$2.6 billion, a significant portion of our
combined five-year goal.

The FTC currently enforces a number
of laws that address consumers’ privacy.
Privacy of personal information is important and companies that make specific
promises to consum ers about the privacy
of their information need to live up to these
promises. Doing so will enhance the confidence that consumers have in the
marketplace. The FTC is concerned with
the misuse of personal inform ation and is
committed to both law enforcement and
education in this area. To meet this
challenge, the FTC is increasing the
resources dedicated to privacy protection.
The areas of focus include: telemarketing,
unsolicited e-mail (spam), ID Theft, and
pretexting, as well as enforcement of the
Children’s Online Privacy Protection Act,
the Gram m-Le ach-B liley A ct, th e
Telemarketing Sales Rule, and Section 5 of
the Federal Trade Commission Act.

Under the third objective we replaced
both performance measures for 2001. The
new measures, relating to education and
outreach activities by FTC personnel
(Measure 2.3.1) and the frequency of the
public’s access to important antitrustrelated content on the FTC’s Web site
(Measure 2.3.2), more directly reflect our
success in preventing consumer injury
through education of the public. Because
we did not systematically collect this information before 2001, we have not yet set
targets for these new measures but we
have collected data to use as a baseline for
evaluating future performance. In 2001,
we completed a total of 141 public
outreach efforts and received more than
2.6 million hits on antitrust information on
the FTC’s Web site. Through our outreach
efforts, the FTC publicizes the antitrust
law and our enforcement intentions, with
the likely result of deterring future anticompetitive behavior.

A major privacy initiative is the FTC’s
proposal to establish a national Do-NotCall list by amending its regulations under
the Telemarketing and Consumer Fraud
and Abuse Prevention Act. The purpose of
a national list is to enhance privacy by
protecting consumers from unwanted and
often intrusive telema rke ting calls.
Currently, consumers who do not want
telemarketers to call them must rely on a
patchwork of do-not-call lists administered
by states and the private sector. The FTC’s
national list would enable consumers,
through one phone call, to remove their
name from numerous telemarketing lists
nationwide.

Ongoing Challenges
The FTC is a small agency with a large
mission. Demands on the agency have increased dramatically over the past decade
as commerce has become increasingly
electronic and the economy has gone hightech and global. Although the FTC con-

7

and Department of Justice (which jointly
enforce the antitrust laws), took effect in
2001. The amendments raised the dollar
thresholds determining which mergers are
subject to the reporting requirement, but
did not change the substantive standard of
legality under the antitrust laws. As a
result, fewer mergers are reported to us
under HSR. Transactions that raise
antitrust concerns are very likely to be
among those reported. Nevertheless, we
are increasing our efforts to monitor
marketplace developments and take action
on non-reportable mergers that could still
harm consumers, and we will not hesitate
to challenge an already-consummated
merger where necessary.

During the past several years, a staggering level of merger activity dominated
our antitrust agenda, with the number,
size, and scope of proposed m ergers
leaping to new highs year after year.
Although the volume of mergers abated
somewhat in 2001, the size, scope, and
complexity of mergers continues to
increase. For example, just three of the
mergers we investigated in 2001 together
were worth about a third of a trillion
dollars. A single large transaction may
involve dozens of overlaps in different
combinations of products and geographic
markets, each of which may require investigation.
In addition, as the economy evolves, we
increasingly encounter mergers involving
h i g h -tech n o l og y
ma rke ts, com ple x
scientific research and development, and
intellectual property. This trend requires a
commensurate expansion of our expertise
in markets involving science and technology, along with thoughtful examination
of the intersection of antitrust and intellectual property law. Thus, for example,
the FTC and Department of Justice Antitrust Division have begun a series of
hearings focusing on the implications of
competition and patent law and policy.

Although the FTC faces challenges –
especially addressing consumer privacy
issues and maintaining competition in a
growing global and electronic marketplace
– we are able to address them m ore
effectively through strategic planning,
performance management, and results
measurement. Using these processes, we
will continue to assess and reassess the
challenges and opportunities facing the
FTC. Our aim is to continue as a citizencentered and results-oriented agency
positioned to be innovative and aggressive
in protecting consumers and businesses
from fraudulent, unfair, deceptive, and
anticompetitive acts or practices.

Amendments to the Hart-Scott-Rodino
Act (HSR Act), which require companies to
report certain proposed mergers to the FTC

8

THE RESULTS
GOAL 1

P REVENT F RAUD , D ECEPTION ,
UNFAIR BUSINESS PRACTICES IN
MARKETPLACE

AND
THE

consumers the information they need to
protect themselves from injury.

Congress has charged the FTC with the
broadest legislative mandate of any federal
consumer protection agency. While most
federal consumer protection agencies have
jurisdiction over a specific m arket sector,
we possess broad law enforcement
authority that encompasses significant
segments of the economy, including business and consumer transactions on the
Internet. Our goal is to protect consumers
by preventing fraud, deception, and unfair
business practices in the marketplace. We
implement three related objectives to
achieve this broad-reaching goal.

One of the greatest challenges we face
as the nation's leading consumer protection agency is safeguarding consumers
in the new electronic marketplace so they
will have the same confidence that they
enjoy in the traditional marketplace.
Online commerce has the potential to
deliver goods and services, often more conveniently, faster, and at lower prices than
traditional bricks and mortar operators.
Online commerce promises enormous
benefits to consumers and the economy.
Moreover, the Internet is stimulating the
development of innovative products and
services that were barely conceivable just
a few years ago and is enabling consumers
to tap into rich sources of information that
they can use to make better informed
purchasing decisions.

1. Identify fraud, deception, and unfair
practices that cause the greatest consumer injury.
2. Stop fraud, deception, and unfair practices through law enforcement.
3. Prevent consumer injury through education.

There is real risk, however, that these
benefits may not be realized if consumers
associate the Internet with fraud operators. The boom in e-commerce has opened
up fertile ground for fraud. In the FTC's
experience, fraudulent operators are always among the first to appreciate the
potential of a new technology to exploit and
deceive consumers. Of particular concern
is that Internet health fraud continues to
plague consumers looking for solutions to
serious health-related illnesses. In sum,
we are using all the tools at our disposal,
such as our consumer complaint database
to help us target areas of consumer
problems, and our law enforcement and

First, we identify practices that cause
consumer injury by analyzing the consumer complaint data collected in our
Consumer Information System database,
holding public discussions, and monitoring
the marketplace, including the Internet.
Next, we use this information to target law
enforcement efforts. Our law enforcement
program aims to stop and deter fraud and
deception, protect consumers’ privacy, and
increase compliance with our consumer
protection statutes to ensure that
consumers have accurate information for
their purchasing decisions. Finally, we
target our education efforts to give

9

rule violations. The FTC also continued an
extensive education campaign on children’s privacy directed to businesses,
parents and educators.

education efforts to respond quickly and
vigorously to these problems.
Privacy of personal information is
important and companies that make
specific promises to consumers about
privacy need also to live up to those
promises. This adds to the confidence consumers have in the marketplace. The FTC
is concerned with the misuse of personal
information and is fully committed to both
enforcement and education in this area.
For example, in the area of children’s
privacy, the FTC is charged with enforcing
the Children’s Online Privacy Protection
Act and its implementing Rule which was
effective in April 2000. In 2001, we
brought our first cases challenging alleged

The FTC’s comprehensive review of the
Telemarketing Sales Rule revealed widespread consumer frustration over unwanted telephone solicitations, which some
see as a violation of privacy in their home.
To address this concern, the FTC has
proposed amendments to the Rule to
establish a National Do-Not-Call Registry.
If the proposal is adopted, consumers
would be able to make one call to register
their preference not to receive numerous
telemarketing calls.

10

OBJECTIVE 1.1

I DENTIFY P RACTICES T HAT
CAUSE CONSUMER INJURY
Sentinel Web site (consumer.gov/sentinel)
created in 2001. The constant input and
analysis of fresh complaint data have
allowed the FTC to move quickly – in some
instances in a matter of weeks – to stop
illegal practices before they cause more
harm to consumers.

To prevent fraud, deception, and unfair
business practices in the marketplace, we
first must identify such practices, especially those that cause the greatest consumer
injury, where we can make the greatest
impact.

Strategies

In 2001, we created a public Web site
for Consumer Sentinel, consumer.gov/
To identify consumer protection probsentinel, that provides consumer fraud
lems, the FTC collects and analyzes data
and identity theft trend data and inforfrom many sources. Our Consumer
mation on how Consumer Sentinel serves
Response Center now receives roughly
the public. We are also working with the
10,000 consumer complaints and inquiries
Department of Defense to launch a new
a week via a toll-free number (1-877-FTCsite that will allow military service memHELP), mail, and the Internet. Partners
bers to enter complaints online and receive
such as the National Fraud Information
consumer education materials. This
Center of the National Consumers League,
complaint data will be added to our Conthe Internet Fraud Complaint Center,
sumer Sentinel database and will be
Better Business Bureaus, and
tracked by the Defense Dethe Canadian fraud database,
partment, which will then be
Performance Measure 1.1.1
PhoneBusters, also provide
able to address the most
Annual number of consumer
us with the consumer comprevalent forms of consumer
complaints and inquiries entered
plaint data they collect. All of
into database.
harm affecting its personnel.
this information is entered
FY 2001 Target:
350,000
into the Consumer InforConsumers can call our tollFY 2001 Actual:
430,000
mation System database and
Met or Exceeded: T
free number, 1 -877 -IDanalyzed by FTC staff to
THEFT, to get information on
identify trends and target
and report identity theft and
fraudulent, deceptive, and
receive guidance on the steps they can
unfair business practices. We share the
take to resolve credit and other problems
fraud complaints that we collect with more
that may have resulted from identity theft.
than 400 other law enforcement agencies
By the end of 2001, we received approxacross the United States, Canada, and
imately 4,000 calls a week, nearly double
Australia via an encrypted Web site called
the amount we received in 2000. The FTC
Consumer Sentinel. Although the FTC is
will use the data it collects from connot empowered to act on behalf of
sumers to spot patterns that can help
individual consumers, consumer complaint
criminal law enforcement agencies prodata obtained through Consumer Sentinel
secute perpetrators and help businesses
enables the FTC and its other law
avoid the financial consequences of
enforcement partners to coordinate their
identity theft. To further help consum ers
enforcement efforts, and to spot trends
deal with the crime, the FTC released a
and target the most serious consumer
universal ID Theft Affidavit that victims of
problems. Summary and trend data are
identity theft can submit to many
shared with the public on our Public
11

are to effectively spot wide-ranging trends,
quickly identify emerging scams, and
efficiently coordinate activities with other
law enforcers. In 2001, we added more
than 430,000 entries, exceeding our target
of 350,000 by approximately 23%. This
reflects the increasing interest of organizations in contributing complaint data to
our database, which gives us a broader
view of what consumers are experiencing.
The database allows us and our law
enforcement partners to identify and
develop cases against fraudulent operators
and leverages our impact on practices that
cause the greatest consumer injury. By
analyzing consumer complaints, we can
identify and refine our enforcement and
education efforts to target the most serious
consumer problems. These include: identity theft, online auction fraud, Internet
service provider scams, unauthorized
billing scams, pyramid and other investment schemes, travel and vacation fraud,
pay-per-call solicitation frauds, high-tech
Internet-based fraud, and health care
fraud.

companies, simplifying the process of
alerting companies when a fraudulent
account has been opened in their name.
Although most ID theft cases are criminal,
the FTC staff systematically examines
complaint data for civil cases within its
jurisdiction and will bring those cases
where appropriate. Criminal cases are
identified by our joint FTC/U.S. Secret
Service Case Referral Program and strong
leads are referred to regional task forces,
many led by the Secret Service Financial
Crimes Division.
Besides receiving and analyzing consumer complaints, we monitor the growing
online marketplace through “Surf Days,”
when we and partner organizations systematically surf the Internet to identify
Web sites engaged in questionable
practices. To date, the FTC has led or
coordinated 34 Surf Days. As a result of
these Surf Days, more than 4,800 warning
letters have been sent to Web operators
with questionable business practices. If a
Web operator ignores the warning, we may
file suit. The FTC also hosts public
workshops to explore cutting-edge issues.
In 2001, we held 17 such conferences and
workshops on a variety of consumer and
business issues. For example, we hosted a
highly successful Identity Theft victims
workshop with more than 170 participants
- victims, consumer advocates, representatives of the financial services industry and
credit bureaus, and law enforcement
agencies - to discuss key problems faced
by identity theft victims and to develop
joint initiatives addressing those problems.

Performance Assessment
and Future Trends
Not only does our database help us
identify the most serious consumer protection problems, it quickly informs us of
emerging scams so that we can move
rapidly to stop consumer injury. In
addition, by collecting data from consumers and other sources and sharing it
with our law enforcement partners, we are
able to coordinate and, thus, augment the
effectiveness of law enforcement agencies
across the country and in Canada and
Australia. To make the database even
more valuable, we continue to pursue
enhancements to increase our collection of
information from consumer agencies in
other countries. For example, we launched
a Web site named econsumer.gov with our
partners in the International Marketing
Supervision Network, an international

Performance Measure
and Results
To assess our effectiveness in identifying fraudulent and deceptive practices, we
measured the number of consumer
complaints and inquiries added to the
Consumer Information System database.
The more data we have, the better able we
12

In FTC’s experience, assessing our
performance using the number of entries
added to our consumer complaint database is a reasonable indicator of our ability
to identify consumer problems. For example, we use consumer complaint data in
all of our fraud cases to identify, initiate,
and develop investigations. In 2001, we
changed this measure from the cumulative
number of consumer complaints and inquiries to an annual count of entries added
to our database. This change was based on
our observation that constantly adding
fresh information to the database is critical
to its effectiveness and its value to law
enforcement. As described previously, the
more information we have, the better we
and our Sentinel partners can do our jobs.
Collecting data from diverse sources in one
central location also increases the value of
the data by giving us an even broader view
of what consum ers are experiencing.

group that identifies and shares information about worldwide consumer protection issues. Through econsumer.gov,
consumers in the 15 participating countries can file complaints using an online
form and obtain consumer education materials. Law enforcement members can
access a nonpublic site to obtain specific
information about the complaints that
consumers have filed.
We continue to increase our capacity to
analyze data quickly through database
enhancements that improve our ability to
respond to frauds and identity theft earlier,
and thus prevent greater consumer injury.
For example, Consumer Sentinel, our law
enforcement encrypted Web site, contains
a new “alert” function that flags suspects
under investigation for other Sentinel
members. Other new features provide
greate r flexibility in sorting and viewing
search results, and contact information for
domestic financial task forces and international consumer fraud agencies. We also
have enhanced our database to track and
analyze privacy-related complaints more
effectively. These new tools will help law
enforcers more effectively and successfully
investigate fraud and pursue illegal activity.

In 2002, we will continue to explore
emerging privacy issues and work with
industry, consumer groups, and other
stakeholders. We also will enhance our
consumer complaint database to track and
analyze privacy-related complaints more
effectively. In 2002, we will explore creating a new performance measure that will
help us evaluate our results in the privacy
arena.

13

OBJECTIVE 1.2

STOP PRACTICES THAT CAUSE
CONSUMER INJURY

Registry. If the proposal is adopted,
consumers would be able to make one call
to register their preference not to receive
telemarketing calls. Telemarketers would
be prohibited from calling consumers who
had registered their telephone numbers
with the FTC without specific approval
Strategies
from the consumer. A second proposed
amendment to the Telemarketing Sales
The FTC plays a vital role in protecting
Rule would address the use of “preconsumers’ privacy, emphasizing both enacquired account information.” Account
forcement and education. We focus on
information “pre-acquired” from sources
telemarketing, unsolicited e-mail (SPAM),
other than the consumer can be misused,
identity theft, and pretexting,
causing consumers to incur
as well as enforcement of the
unauthorized charges on
Performance Measure 1.2.1
Children’s Online Privacy
their accounts.
Dollar savings for consumers from
Protection Act, the GrammFTC actions which stop fraud.
Leach-Bliley Act, and the
Telemarketing fraud conFY 2001 Target:
$400 million
Telemarketing Sales Rule as
tinues to be a law enforceFY 2001 Actual:
$487 million
well as Section 5 of the
ment priority, as does proMet or Exceeded: T
Federal Trade Commission
tecting consumers from more
Act. Obtaining consumers’
Performance Measure 1.2.2
traditional scams that have
Total expenditures of deceptive or
private financial information
moved to the Internet, includunfair advertising campaigns
under false pretenses - a
stopped.
ing health-related fraud. In
practice known as “pre2002, we also intend to inFY 2001 Target:
$300 million
texting” - violates the Grammcrease our enforcement acFY 2001 Actual:
$86 million
Leach-Bliley Act. In 2001, the
tivities against fraudulent
Commission filed its first
and deceptive spam (unactions in U.S. District Courts
solicited e-mail) promoting
to halt the operations of
chain letters, pyramid schemes, or other
information brokers who use false prekinds of “get-rich-quick” schemes that can
tenses, fraudulen t state me nts, o r
cause substantial econom ic injury to
impersonation to illegally obtain conconsumers.
sumers’ confidential information - such as
bank balances - and sell it. In each of the
One of the most effective tools in the
cases, the court temporarily enjoined the
battle against fraud has been the law
defendant from continuing the illegal
enforcement sweep - simultaneous law enpractices and imposed an asset freeze
forcement actions by federal, state, and/or
pending final resolution of the cases.
local partners against numerous defendants nationwide that focus on a particular,
In 2002, the FTC will receive and
widespread type of fraud. Each sweep is
review comments on proposed amendsupported by consumer education aimed
ments to the Telemarketing Sales Rule.
at preventing future losses to the public.
Two of these proposals relate directly to
Since our first sweep in 1995, the FTC and
privacy. First, the FTC has proposed
its partners have brought 1,831 law enestablishing a National Do-Not-Call

Once we identify fraud, deception, and
unfair business practices in the marketplace, we focus our law enforcement efforts
on areas where we can have the greatest
impact for consumers.

14

ing of value in return. The savings calculation actually may underestimate the
FTC’s impact because it assumes that the
fraud would have continued for only one
more year; however, it provides a uniform
method for calculating savings and minimizes speculation about the likely duration
of the fraud. The law enforcement actions
included in this measure were taken
against fraudulent operators ranging from
individuals or small companies to scam
artists operating large schemes on the
Internet. Our experience in most cases is
that once we file a complaint in federal
district court and obtain a court order, the
defendants stop their fraudulent practices;
if they fail to comply, they are subject to
contempt actions. Thus, in stopping these
frauds, we stop further consumer losses to
these defendants. By publicizing these law
enforcement actions and distributing consumer education materials, we seek to
increase consumer confidence in the
marketplace.

forcement actions in 60 sweeps against
fraudulent operators. This total includes
410 cases brought by the FTC alone. In
2001, the FTC led 5 sweeps resulting in a
total of 229 actions, including 39 FTC
cases – for every case the FTC brought our
partners brought almost 5 more. We will
continue to use sweeps to leverage our
resources not only by reducing fraud
through additional law enforcement
actions, but by further raising consumer
awareness by generating more local,
regional, and international interest.
In the nonfraud area, we work to ensure compliance with our consumer protection statutes. Given our broad jurisdiction and limited resources, we focus on
the most serious problems, using varied
enforcement tools and encouraging selfregulation in appropriate situations. Information obtained from our Consumer
Information System database and from
monitoring national advertising enables us
to focus our law enforcement actions on
areas that pose the greatest risks to
consumer health, safety, and economic
well-being. In lieu of regulation or law
enforcement, we work with industry and
interested groups to support private initiatives where appropriate.

In the non-fraud area, our goal was to
reduce consumer injury by stopping
deceptive or unfair advertising campaigns
with combined media expenditures totaling
$300 million. This measure is based on the
assumption that advertisers seek to increase sales by at least as much as they
spend on advertising, and that the more a
company spends on an advertising campaign, the more widespread the deceptive
or unfair message. We stopped $86
million, or 29% of our goal. This is a new
measure that was first implemented in
2001 and our target was set using data
from the previous year. The base year
2000 included final orders halting several
large national advertising campaigns. In
2001, nearly half of our nonfraud cases
with final orders involved companies that
used the Internet or other low-cost
alternatives to conduct advertising campaigns. A proposed change in this
measurement is discussed below.

Performance Measures
and Results
Our goal in 2001 was to save consumers more than $400 million by
stopping fraud. We surpassed this target,
with our actions saving consumers an
estimated $487 million. Consumer savings
are measured on the basis of the estimated
annual fraudulent sales of defendants in
the 12 m onths prior to filing a com plaint.
The total dollar value of fraudulent sales is
an approximate measure because in the
majority of all fraud cases we pursue, the
consumer pays money and receives noth-

15

sumer groups to extend the reach of our
efforts to increase compliance. The scope
of our current and upcoming priorities
spans our broad jurisdiction, and this
broad jurisdiction makes it difficult to
measure the overall impact of our nonfraud activities. We are exploring using
new performance measures focusing on
our impact in more narrowly defined areas.
Nonetheless, we will continue to use business and consumer education, as well as
selective enforcement, to ensure broad
compliance with the consumer credit
statutes, the Mail and Telephone Order
Rule, and other rules and regulations we
enforce.

Performance Assessment
and Future Trends
Drawing on Consumer Sentinel data,
Internet fraud is significant and growing.
We are targeting the most pervasive online
fraud and moving quickly to stop large,
fast-growing Internet scams. In 2001, the
Commission brought 50 cases involving
fraudulent or deceptive marketing practices related to the Internet, bringing the
total number of Internet cases filed by the
FTC since 1994 to 200. We expect fraud to
continue to grow as the use of the Internet
rises and, in response, we will increase our
efforts to slow online fraud and prevent
consumer injury.

As stated, we did not meet our target of
stopping $300 million in deceptive or unfair advertising campaigns. We stopped
$86 million, or 29% of our goal. After
studying those results and current industry practices, we have reset our target
to $100 million for 2002 and 2003 for the
following reasons. First, since this measure
was established, the FTC has increased its
emphasis on taking action against deceptive Internet advertising claims. Internet
advertising is broadly disseminated, but is
considerably less expensive than traditional advertising. Second, a number of
advertisers are now using many alternatives to traditional advertising and it is
difficult, if not impossible, for us to measure the impact of these efforts. Finally,
better monitoring has increased the FTC’s
effectiveness at stopping some large
advertising campaigns early on. We will
continue to closely monitor this area, and
again, will explore whether there are other
measures that will allow us to more effectively evaluate our impact in the nonfraud
area, including our efforts to protect
consumers’ privacy.

In our five-year strategic plan, our goal
is to save consumers on average $400
million a year, or $2 billion over five years.
We based this on savings achieved in 1999
and 2000 and the types of fraud we are
observing in the marketplace. In particular, online fraud has the potential to
reach consumers worldwide and cause
great econom ic injury. As our expertise in
high and new technologies develops, we
will be better able to detect and deter
online fraud before these schemes take
hold. By stopping fraudulent operators
early, measured savings in each case may
fall; however, the quick response results in
less injury to consum ers. This effort,
combined with strategies such as law
enforcement sweeps, demonstrates our
effectiveness in preventing consumer
injury.
In addition to fighting fraud, we also
focus on compliance with traditional advertising law and FTC Rules and Guides.
We work cooperatively with our law enforcement partners, industry, and con-

16

OBJECTIVE 1.3

P REVENT C ONSUMER I NJURY
THROUGH EDUCATION
are given the tools they need to spot
potentially fraudulent and other illegal
promotions, and businesses are advised as
to how they can comply with the law. As
with our law enforcement, more of our
education efforts now involve the Internet.
We not only address consumer issues involving the Internet, such as shopping
online, but we also use the Internet as a
tool to reach consum ers, for example,
through our Web sites, online banner
public service announcements, and online
distribution of “news” consumers can use.

Consumer and business education is
the first line of defense against fraud and
deception and a top priority of the FTC.

Strategies

The FTC is committed to using
education and outreach as cost-effective
methods of preventing consumer injury,
increasing business compliance, and adding an extra dimension to our law enforcement program. Virtually every consumer protection effort contains an educational component, from compliance surfs
We coordinate with hundreds of private
and law enforcement sweeps to the
and public partners to provide information
announcement of new rules and reguabout specific promotions, products, and
lations. Through reports, publications,
services. The F TC a lso
Web sites, media events,
continues to manage the
speeches, and collaborative
consumer.gov Web site and to
Performance Measure 1.3.1
activities with other organiNumber of education publications
recruit new agency members
zations, the FTC reaches tens
distributed to or accessed
to participate in the site,
electronically by consumers.
of millions of consumers and
which offers one-stop access
businesses every year. In
FY 2001 Target:
10 million
to federal consum er infor2001, we conducted approxFY 2001 Actual:
15 million
mation. In 2001, the FTC took
Met or Exceeded: T
imately 40 educational camthe lead for the third conpaigns covering traditional
secutive year in organizing
subjects such as credit card
National Consumer Protection
protection, care labeling, direct mail,
Week. This year’s theme campaign was
pyramid schemes, and scholarship scams;
abusive lending practices. Our partner
high-tech subjects such as online
organizers were the National Association of
shopping, day trading, domain name
Consumer Agency Administrators, AARP,
registration, free PC offers, Internet service
the National Consum ers League, the
providers, and international modem
Council of Better Business Bureaus, the
dialing; and timely subjects such as crossConsumer Federation of America, the U.S.
border fraud, virtual health treatments,
Postal Service, the U.S. Postal Inspection
predatory lending, energy efficiency,
Service, the National Association of
disaster plans, and charitable giving
Attorneys General, and the Department of
th
terrorist
following the September 11
Justice.
The FTC also continued to
attacks.
increase its federal agency partnership
base for consumer.gov, with a total of 179
Our Consumer Information System
agencies now participating. In 2001, the
database helps us tailor our education
Web site received more than 986,000
efforts to areas where fraud, deception,
“unique visits” and nearly 2,050,000 “page
unfair practices, and information gaps are
views;” it also became the portal for
causing the greatest injury. Consumers
17

gral role in the FTC’s education,
deterrence, and enforcement efforts, permitting the agency to reach vast numbers
of consumers and businesses quickly,
simply, and at low cost. As demonstrated
by our online distribution total, the FTC
has successfully promoted and led the use
of the Internet to educate and empower
consumers, a trend that we expect to
accelerate in the future.

consumer information provided by the
federal government through FirstGov, a
public-private partnership.

Performance Measure
and Results
We gauge our impact under this objective by tracking the number of consumer
and business education publications we
distributed to the public. Ideally, we would
like to measure the extent to which our
educational materials improve consumer
understanding and help them get better
value for their money. This would be
extremely difficult to measure, but tracking the distributions of publications in
response to consumer requests gives us a
rough idea of how many consumers believe
our information will prove useful. In 2001,
the FTC distributed approximately 15
million publications: 5.4 million print publications and 9.6 million through the consumer protection Web page on the FTC
Web site. This is the second year in which
electronic distribution surpassed print distribution. We exceeded our goal of 10
million publications by approximately 5
million, due primarily to an increase of 4
million or 71% in the number of publications accessed online. Our reach nationwide was extended by more aggressive outreach and promotion of FTC materials and
our toll-free numbers. We used information from our database to target our
education campaigns to serious consumer
problems.

Our measure of the number of publications distributed by the FTC indicates
our impact in educating consumers,
although it does not fully capture the
millions of FTC publications that are
distributed to consum ers by others. While
the num ber of print publications we distribute remained relatively static, the
number of publications accessed through
the Internet has soared as more consumers and businesses go online. In 1996,
we distributed only 140,000 publications
online. In 2001, we distributed 9.6 million
through our the Internet Web site alone.
These statistics illustrate the Internet’s
coming of age as a mainstream medium
and highlight its usefulness in any largescale educational effort. Consequently, we
will increase our use of the FTC’s Web site,
ftc.gov, and the multi-agency Web site,
consumer.gov, to reach consum ers, businesses, law enforcement officials, and the
media more efficiently and effectively.
In the next year, we will continue to
focus consumer and business education
efforts on areas identified by our consumer
complaint databases where information
gaps cause the greatest injury, such as
globalization, Internet scams, fraudulent
schemes, and identity theft. In the privacy
area, we will use an approach that has
proven successful in the past by
establishing an outreach program to
increase consumer awareness of and
business compliance with the privacy
information required by the GrammLeach-Bliley Act. We will continue to
creatively use technology, including new

Performance Assessment
and Future Trends
The FTC seeks to alert as many consumers as possible to the telltale signs of
fraud, deception, and unfair business
practices, and other critical consumer
protection issues. Use of the Internet to
disseminate information about fraud and
technology-related matters plays an inte18

tion would be most beneficial to them, and
identify topics where Spanish language
materials are not already provided by other
government agencies.

interactive media, to extend the reach of
consumer and business education.
Finally, Census data shows that the
United States has a large and growing
Spanish-speaking population. Because
these consumers may not speak English or
are non-native speakers of the language,
they may be more susceptible to the
nuances and complexities of disclosures,
advertisements, or other aspects of consumer transactions. In order to meet the
needs of this vulnerable group, the FTC
will assess what areas of consumer educa-

Increasing the visibility of the FTC as
the nation’s consumer protection champion not only helps consumers better
protect themselves, but also encourages
consumers to provide the FTC with more
and better complaint data. That, in turn,
will make our law enforcement and education efforts even more effective.

19

GOAL 2

PREVENT ANTICOMPETITIVE MERGERS
AND OTHER ANTICOMPETITIVE BUSINESS
PRACTICES IN THE MARKETPLACE

Competition among sellers in an open
marketplace results in lower prices for
consumers, leads to high quality products
and services, maximizes consumer choice,
and spurs the discovery and development
of beneficial new products and services.
Anticompetitive mergers, and other practices that diminish competition, deny
consumers these benefits, and are illegal
under the antitrust laws. Thus, the FTC’s
goal is to promote vigorous competition by
applying the antitrust laws to (1) prevent
anticompetitive mergers and (2) stop
business practi ce s
th a t d im inish
competition, such as agreements among
competitors about prices or other aspects
of competition. We refer to these two types
of law enforcement as merger and
nonmerger enforcement, respectively. We
apply three related objectives to achieve
this broad-reaching goal.

those that are benign or procompetitive.
This step is critical because a merger or
business practice may be either neutral,
beneficial (by enabling sellers to be m ore
efficient and pass those savings along to
consumers), or harmful (by enabling sellers to reduce the output of their product
and raise the price to consum ers). Thus,
indiscriminate or ill-considered intervention into the marketplace may do more
harm than good.

1. Identify anticompetitive mergers and
practices that cause the greatest consumer injury.
2. Stop anticompetitive mergers and practices through law enforcement.
3. Prevent consumer injury through education.

Third, we seek to prevent anticompetitive activity by educating businesses
and consumers about the antitrust laws
and the FTC’s efforts to ensure competitive
markets. Increased knowledge and understanding on the part of businesses
facilitate their efforts to comply with the
law. Increased knowledge and understanding on the part of consumers enable
them to identify anticom petitive activity
more readily and to bring such activity to
our attention for possible enforcement
action.

Second, once we identify a potentially
or actually anticompetitive merger or
business practice, we take enforcement
action under the antitrust laws to stop it,
either through an administrative challenge
or in federal court. In many instances, we
are able to reach a consent agreement that
remedies our competitive concerns while
avoiding litigation.

First, we identify potentially or actually
anticompetitive mergers and business
practices by conducting thorough factual
investigation and applying economic analysis to distinguish between actions that
threaten the operation of free markets and

20

OBJECTIVE 2.1

I DENTIFY A NTI C O MPETITIVE
MERGERS AND PRACTICES THAT
CAUSE CONSUMER INJURY
the HSR Act, effective in 2001, raised the
thresholds that determine whether a
transaction is subject to the notification
requirement. This change, along with a
slower pace of economic activity, significantly reduced the number of HSR filings,
from an all-time high of 4,926 in 2000 to
2,376 in 2001.

To prevent anticompetitive mergers and
anticompetitive business conduct, we must
first determine which mergers and business practices are anticompetitive.

Strategies

To achieve this objective, the FTC
identifies the mergers and business pracThe change in HSR filing thresholds did
tices that should be examined as potennot change the standard of legality under
tially anticompetitive, and conducts an
the antitrust laws, however. While the vast
inquiry to determine whether to pursue
majority of potentially problematic mergers
enfo r c e m e n t
action.
A
continue to be subject to the
collateral, but important, conrevised HSR filing requirePerformance Measure 2.1.1
sideration is that we conduct
ments, smaller merger transPercent of HSR second requests
our inquiry in a way that
resulting in enforcement action.
actions may still be antiminimizes the cost or inconcompetitive. After the increase
FY 2001 Target:
50%
venience to businesses.
in reporting thresholds, we
FY 2001 Actual:
68%
Met or Exceeded: T
began to devote more effort to
The premerger notification
identifying non-reportable
Performance Measure 2.1.2
requirements of the Hartmergers that may harm (or
Number
of
nonmerger
Scott-Rodino (HSR) Act are our
have harmed) competition. We
investigations opened per year.
primary means for identifying
do this by monitoring the
FY 2001 Target:
45 - 70
potentially anticompetitive
trade press and Internet reFY 2001 Actual:
56
mergers, acquisitions, and
sources to stay informed of
Met or Exceeded: T
joint ventures (which we refer
industry developments, followto collectively as mergers).
ing up on case leads from
The
H SR Act require s
Congressional offices, other
companies to report certain proposed
Executive branch agencies, and state and
mergers to the FTC and Department of
local governments, and encouraging conJustice (which jointly enforce the antitrust
sumers, businesses, and the bar to notify
laws), and wait for a specified period
the FTC of possibly anticompetitive mer(usually 30 days) to allow antitrust review.
gers. Despite the change in reporting
We examine each transaction reported
thresholds, the number of proposed
under this requirement. We use various
mergers requiring investigation did not fall
other means to identify potentially antiappreciably. We opened 195 merger incompetitive mergers that are not subject to
vestigations in 2001, a decrease of less
the HSR reporting requirements.
than eight percent from 2000.
After a decade of rapid growth, overall
merger activity slowed somewhat during
2001, but the FTC’s merger review workload remained very high. Amendm ents to

The abatement in the pace of merger
activity in 2001 was more than offset by
the continuing increase in the size, scope,

21

of negotiations on second request
modifications. These measures were reported by the FTC to Congress on June 19,
2001.

and complexity of merger transactions.
Large, multifaceted transactions - the ones
that remain subject to HSR - are m ore
likely to raise antitrust issues, and those
issues may involve a number of separate
product and geographic markets, each
requiring separate analysis.

Because of the typical complexity of the
second request issues, and the fact that
the statute contemplates only one such
request per filing, an investigation extended by the issuance of a second request
almost always requires significantly more
investment of resources, by both the
agency and the parties. Thus, we seek to
identify as many of the competitively
harmless transactions as possible within
the initial waiting period. In 2001, the FTC
and the Department of Justice permitted
more than 95% of the reported transactions to proceed by the end of the initial
waiting period.

We work to complete the review of each
filing as quickly and as efficiently as
possible, both to conserve our available
resources to devote to other work, and to
minimize the delay imposed on businesses
by the HSR requirements. In most cases,
we can make a reasonable judgment about
whether a merger has the potential to be
anticompetitive or not within a few days of
a filing, based on materials filed with the
HSR notification. The staff further
examines transactions that raise more
difficult questions, and may present the
matter to the FTC’s Merger Screening
Committee, comprising senior officials of
the Bureaus of Competition and Economics. If the Committee determines that
more information is needed in a matter, it
authorizes a more extensive investigation,
generally including the issuance of a
formal request under the HSR Act for
additional information from the parties (a
“second request”).

Performance Measures
and Results
We used two performance measures to
gauge how well we achieved this objective
in 2001, one of which - the percentage of
matters involving a second request that
resulted in enforcement action - was new
this year. Previously, we measured our
success in identifying anticompetitive
mergers in terms of the average number of
days we devoted to reviewing actions
reported to us under the HSR premerger
notification program. This measure reflected the efficiency with which we
conduct these reviews, but not our
effectiveness. While efficiency is important
- quick completion of our reviews of
reported transactions helps to conserve
FTC resources, reduces associated burden
on businesses, and allows beneficial
mergers to proceed sooner - we sought a
measure that would relate more directly to
the core objective.

The issuance of a second request extends the parties’ waiting period, usually
until 30 days after they com ply with the
request for information. Following an
internal review of the agency’s second
request process, called for by the amendments to the HSR Act, the Commission
adopted measures to reduce burden and
delays in second request matters. The new
measures include a process for seeking
modifications or clarifications of second
requests, and expedited senior-level
internal review of disagreements between
merging parties and agency staff; streamlined internal procedures to eliminate
unnecessary burdens and undue delays;
and implementation of a systematic
management status-check on the progress

We strive to determine which of the
many merger transactions we encounter
are likely to cause consumer injury – and
22

counting the number of nonmerger
investigations opened. While, the mere
opening of a formal investigation does not
signal the presence of anticompetitive
conduct, we do require preliminary evidence and a viable legal/econom ic theory
of consumer harm as a prerequisite to
opening an investigation. We screen
hundreds of allegations of illegal conduct
each year, but few present sufficient
grounds for formal investigation. Therefore, the number of investigations we open
reflects our ability to identify conduct that
may be anticompetitive, along with the
level of resources we are able to devote to
this area.

therefore warrant full investigation. When
we issue second requests and investigate
thoroughly, we can determine the effect of
a transaction on competition with greater
confidence. But given the level of FTC
resources necessary for such an investigation, and the cost and delay imposed on
businesses, we must select the transactions to review with great care. If we do
this successfully, the resulting outcome
will be enforcement action (consent agreement, preliminary injunction, or the
parties’ abandonment of the transaction in
light of antitrust concerns) in a significant
percentage of the m erger investigations in
which we issue a second request. At the
same time, we recognize that too narrow a
focus – pursuing only those transactions in
which an antitrust problem is relatively
obvious – could allow other transactions
that may be similarly harmful, but in more
subtle ways, to proceed unchallenged.

The year 2001 was successful in terms
of identifying anticompetitive conduct in
the market. Our goal has been to open 45
to 70 nonmerger investigations over the
course of each year, a range reflecting the
number of new nonm erger investigations
opened in recent years. We met this goal,
opening 56 nonmerger investigations (more
than double the 25 investigations opened
in 2000).

Thus, our aim is to achieve balance. To
make the best use of our resources, we
seek to limit the issuance of second
requests only to those few transactions
that we believe are likely candidates for
enforcement action. To gauge our success,
we measured the percentage of matters
involving a second request that ultimately
resulted in enforcement action. A percentage of at least 50% indicates that we
succeeded in identifying problematic
transactions without casting our net too
widely. At the same time, a very high
percentage of second requests resulting in
enforcement action might suggest that we
need to review our policies and practices
to ensure that we are not applying too
restrictive a standard. In 2001, we believe
we achieved the desired balance. We
issued second requests in 34 merger
transactions, and 23 of those 34 matters,
or 68%, resulted in enforcement action.

Performance Assessment
and Future Trends
Our initial experience with our new
performance measures revealed some
methodological issues. For example,
second request investigations often extend
beyond fiscal year boundaries - investigations of about half of the 27 second
requests issued during 2001 were still
pending at the end of the year. In addition,
counting only those investigations in which
a second request was issued and the
matter was concluded within the same
year could skew the results, because
matters ultimately resulting in enforcement action frequently require a more
lengthy investigation. We believe that
basing the measure on the universe of
investigations completed during a fiscal

In addition to mergers, the FTC focuses
on anticompetitive practices that cause
consumer injury. We measure our success
in identifying possibly illegal conduct by
23

a more proactive approach to identify
possible source of anticompetitive conduct
in 2001. As in the past, we focused our
efforts on sectors of the economy that most
affect consumers. Thus, we focused on
likely anticompetitive patent extension
strategies in the pharmaceutical industry,
a practice that can deny consumers
significant cost savings from generic drugs.
We also began to look m ore systematically
at the possibility of restraints on competition among groups of professionals
resulting from practices of professional
associations. Possible anticompetitive
abuse of the standard setting process in
the computer technology and other sectors
was an additional priority area. Finally, the
agency established two task forces to
examine the scope of exemptions to the
antitrust laws to identity possible categories of harmful conduct that may
purportedly be, but are not in fact, exempt
from the antitrust laws.

year, regardless of when the second
request was issued, is most logical.
In 2001, the FTC took enforcement
action in 68% of the second request
merger investigations concluded during
the year. We initially set a target of at least
50%, which we exceeded by a significant
margin. Since our goal, however, is to
balance the need to identify all potentially
anticompetitive mergers, while also minimizing the burdens that the second
request imposes on businesses, a
percentage approaching 100% would be
cause for concern because that would
suggest the possibility of our having failed
to pursue illegal mergers.
Upon review, we have realized that
merger matters concluded in 2001
included many that were very difficult and
complex. Thus, we do not believe that our
having taken enforcement action in 68% of
the matters involving a second request is
the result of having selected only simple
cases to pursue. It is more likely that our
initial target was too cautious. We make
significant efforts to “clear” mergers, where
possible, during the preliminary waiting
period, to avoid encumbering businesses
with costs and delays associated with a
second request in competitively benign
transactions. We will continue to assess
our performance target under this
measure during 2002.

More generally, we improve our ability
to identify anticompetitive mergers and
practices that harm consumers by expanding our knowledge and understanding of
new and evolving antitrust policy issues.
As the economy evolves - with new
products and services, as well as new
methods of conducting commercial activity
- so must antitrust. In 2001, for example,
the FTC conducted a second public
workshop to explore competition policy
issues related to business-to-business
(B2B) and business-to-consumer (B2C)
electronic commerce, continuing the dialog
begun at a prior workshop. The agency
also held a conference in August 2001,
focusing on factor that affect the price of
refined petroleum products. We also held
a roundtable with prominent Industrial
Organization econom ists to identify
empirical economic research that could be
done to help us better protect consumers
and competition.

Following 2000, a year with an unprecedented level of merger activity, 2001
marked the restoration of our historic
balance of resource allocations between
merger and nonmerger activity. The 56
new nonmerger investigations opened in
2001 are particularly significant when
compared to the 25 new nonmerger
investigations opened in 2000. The
restoration of resources that had been
diverted to merger work allowed us to take

24

OBJECTIVE 2.2

STOP ANTICOMPETITIVE
M ERGERS AND P RACTICES
THROUGH LAW ENFORCEMENT
In nonmerger matters, we seek to stop
ongoing activity that harms competition.
To do so, we may ask the Commission to
initiate administrative proceedings before
an Administrative Law Judge to challenge
the conduct and establish a basis for an
order that the respondents (the parties to
the proceeding) “cease and desist” the
conduct. The Commission
also has authority to seek
Performance Measure 2.2.1
relief in federal courts,
Positive outcome of cases brought by
though this is rarely used in
FTC due to alleged violations.
nonmerger matters. Again,
FY 2001 Target:
80%
we are often able to negotiate
FY 2001 Actual:
94%
a consent agreement with the
Met or Exceeded: T
respondents that remedies
Performance Measure 2.2.2
the problem without resort to
Dollar savings for consumers
litigation.
resulting from FTC actions stopping

Law enforcement represents the most
direct method by which the Commission
pursues its goal of preventing anticompetitive mergers and anticompetitive business practices.

Strategies

To stop potentially anticompetitive mergers and
practices through law enforcement, we seek legal
remedies under the antitrust
laws, through federal court
action, administrative proceedings, or negotiated settlements. For mergers, our
preferred strategy - that is,
anticompetitive mergers.
the most effective and costIn both merger and nonFY 2001 Target:
$800 million
efficient strategy - is to premerger matters, we emFY 2001 Actual:
$2.5 billion
vent such mergers before they
Met or Exceeded: T
phasize thorough investioccur. We implement this
gation, as well as sophistiPerformance Measure 2.2.3
strategy primarily through
cated legal and economic
Dollar savings for consumers
our authority to seek a federal
analysis, to ensure we
resulting from FTC actions stopping
court injunction preventing
anticompetitive nonmerger activity.
accurately assess the pothe transaction. In many
tential for competitive harm
FY 2001 Target:
$200 million
cases, we are able to resolve a
resulting from the transFY 2001 Actual:
$157 million
com pe titive c o n c e r n
by
a c tio n
or
co ndu ct
in
n e g o t ia t in g
a
c o n se n t
question. When the Comagreement before having to
mission concludes that the
seek an injunction. In some instances,
likelihood of such harm indicates a law
such as when a merger has already been
violation, and no settlement is possible,
consummated, we can rely on the FTC’s
the Comm ission authorizes the staff to
internal administrative remedial powers to
litigate the matter. We prepare thoroughly
restore competition lost as a result of the
for litigation, whether before an Adminmerger. In many cases, the competitive
istrative Law Judge or in federal court. The
problem relates to only a portion of the
high percentage of settlements in FTC
transaction, so a divestiture of assets
antitrust cases (or, in the case of mergers,
sufficient to preserve or restore comthe parties’ abandonment of the
petition, which will allow other, comanticompetitive transaction) results, in
petitively neutral or beneficial aspects of
large measure, from our readiness to
the merger to go forward, is frequently a
successful remedy.
25

promotes competition in the specific
market(s) at issue, but also serves to
comm unicate to the business and legal
communities that the FTC can and will
move successfully to challenge the type of
merger transaction or conduct at issue.
We explain the relevant facts and issues in
detail in settled cases in published
“Analyses to Aid Public Comment” so the
nature of the problem is clear. In addition,
litigated decisions serve as legal precedent,
upon which we can rely in future
enforcement actions. This deterrent effect
prevents many anticompetitive mergers
and acquisitions from even being proposed.

obtain the needed relief through litigation,
if necessary.
We place increasing emphasis on
crafting remedies that will successfully
eliminate the anticompetitive effects of the
activity in question, and do so in a timely
fashion. As part of this strategy, we study
and evaluate the remedies used in past
antitrust cases, particularly divestiture
orders used to resolve merger cases. This
ongoing process focuses on what makes
divestiture orders most effective in preserving or restoring competition, and on
how to expedite the completion of curative
divestitures.
We also study current or emerging
topics involving possible antitrust enforcement to develop policy positions. For
example, in early 2001 the FTC issued
reports summarizing the results of workshops held in 2000 relating to two current
antitrust topics, slotting allowances and
business-to-business (B2B) electronic
marketplaces. A second workshop to
explore competition policy issues related to
B2B and business-to-consumer (B2C)
electronic commerce took place in May
2001. Additional work relating to slotting
allowances is also underway. The learning
derived from these workshops, as well as
from economic research on various
competition issues, will provide a foundation for future enforcement initiatives.

Performance Measures
and Results
We use three measures to gauge our
success in stopping potentially anticompetitive mergers and practices through
law enforcement. These measures include
(1) the percentage of successful outcomes
when we challenge anticom petitive
mergers and practices, (2) the amount of
savings to consumers resulting from our
merger enforcement efforts, and (3) the
amount of savings to consumers resulting
from our nonmerger enforcement efforts, a
new performance measure for 2001.
Economic theory and evidence demonstrate that competition results in lower
prices, better quality, and more innovation
in markets. Thus, we produce beneficial
outcomes when we preserve competition
by obtaining positive results. We seek to
obtain a positive result in at least 80% of
the matters in which we determine that a
merger or a course of conduct is anticompetitive. Positive results include the
parties’ abandonment of an anticompetitive transaction after we identify
antitrust concerns, a consent agreement to
resolve antitrust concerns, or a successful
challenge in court. A negative result occurs
when parties refuse to settle antitrust

Other strategies include ongoing
training programs for our attorneys to
develop their skills and m aximize their
effectiveness in litigation, negotiation, and
other areas. We also work to ensure that
administrative litigation and adjudication
reach a timely resolution, so that challenged restrictions on competition are
rem oved without undue delay.
Finally, we make our law enforcement
presence visible in order to serve our
objective through deterrence. Each successful enforcement action not only
26

year period 2001-2005 through prevention
of anticompetitive mergers. Meeting the
five-year goal requires an average of $800
million per year in consumer savings.
Merger enforcement saves consumers
money by preventing price increases that
likely would have occurred due to the loss
of competition if the merger had gone
forward unchallenged. In calculating these
savings, we take into consideration the size
of the markets involved, the percentage
increase in price that would likely have
resulted from the merger, and the likely
duration of the price increase.2 We exceeded our goal by a wide margin in 2001,
saving consumers $2.5 billion by stopping
anticompetitive mergers or requiring
divestitures to preserve competition.

concerns raised by the agency and we are
unsuccessful in obtaining relief through
the courts.
Because positive results lead to beneficial outcomes, it is im portant that we
usually succeed when we challenge
anticompetitive mergers and practices. We
do not help consumers if we do not
succeed in persuading a court to block
merger, for example, either because we
failed to present our case adequately or
because the merger turns out not to be
anticompetitive. This is not to say that the
FTC, or any law enforcement agency,
should win every case. Some cases involve
very close questions, on which reasonable
minds can and do differ. Other cases may
be very difficult from a litigation standpoint, and all of the FTC’s antitrust
challenges are defended by highly competent and well-financed counsel. The
agency should not shy away from
challenging cases that may result in
occasional losses, as long as the overall
record is successful.

We have decided to stop formally
measuring the average time needed to
complete divestitures required by consent
orders. Timely completion of divestitures
helps to ensure that the competition that
existed before the merger continues, by

We far exceeded our goal in 2001,
achieving relief through litigation, reaching
a successful settlement agreement, or
persuading parties not to proceed with an
anticompetitive acquisition in approximately 94% of the matters we challenged.
The Commission approved 20 proposed
administrative consent agreements and we
obtained federal court approval of one
additional settlement. We also obtained
sought-after relief in four of six litigated
matters, all of which were concluded in
2001. In addition, parties to proposed
mergers abandoned their transactions in
four instances following our investigation.
Thus, we were able to obtain a positive
result in 29 of the 31 instances in which
we sought to stop or prevent adverse
effects on competition in the marketplace.

2

We derive these estimates from a thorough
analysis of company documents and detailed
pricing data, which FTC attorneys and economists
routinely conduct as part of their investigations.
In some cases, the available information allows us
to estimate with specificity the extent to which
prices would rise as a result of an anticompetitive
merger. Where we do not have such specific
information, we conservatively estimate that an
anticompetitive merger would lead to a price
increase of at least 1%, absent enforcement
action, lasting for two years. The methodology
used is based on the analytical guidelines used by
the FTC and the Department of Justice for the
analysis of horizontal mergers. See U.S. Dept. of
Justice and Federal Trade Commission, Horizontal
Merger Guidelines §§ 1.1, 1.2. While we cannot
predict price increases following a merger with
absolute certainty, the data and analytical
framework are the same as those that courts rely
upon in deciding merger cases. Moreover, price
increases greater than the conservative one
percent estimate, in at least some cases (a highly
likely scenario), would offset the occasional
instance in which at least a one percent price
increase would not have materialized.

In 2001, we stayed on course to
achieve our goal of $4 billion in direct
dollar savings to consumers over the five27

Our goal is to achieve $1 billion in
direct dollar savings to consumers over the
five-year period 2001-2005 by stopping
anticompetitive practices that would cost
consumers at least that much if allowed to
continue. Meeting the five-year goal requires an average of $200 million per year
in consumer savings. In calculating these
savings, we take into consideration the size
of the markets involved, the percentage
increase in price that would likely have
resulted from the m erger, and the likely
duration of the price increase. In 2001, we
obtained consumer savings of approximately $157 million in nonmerger actions.

avoiding delays that might deplete the
viability of the assets to be divested.
Policies and practices put in place in
recent years to expedite divestitures have
become accepted and well-established,
however, so we believe that timely
divestitures will continue to be the norm.
In 2001, to focus our renewed attention
to nonmerger enforcement, we began to
measure consumer savings resulting from
nonmerger enforcement activities. The
tracking of nonmerger consumer savings
underscores the importance of our nonmerger enforcement work, which has been
overshadowed somewhat by merger activity in recent years.

Performance Assessment
and Future Trends

We base our nonmerger consumer
savings estimates on industry and company data obtained in our investigations.
Because the types of activity involved in
nonmerger cases vary considerably, no one
methodology represents an ideal way to
compute consumer savings. Instead, we
seek to develop a conservative estimate
based on the specific facts and circumstances involved in each case. Each
estimate is reviewed by at least one senior
attorney and economist to ensure
consistency, reasonableness, and accuracy. In cases where it is not possible to
measure directly the amount of consumer
savings resulting from enforcement action,
we conservatively use a “default” estimate
of 1% of the amount of sales (i.e., a 1%
price increase multiplied by sales) in the
affected market(s) for one year. Most often,
the cost to consumers from anticompetitive
activity exceeds 1% of the amount of sales,
and the anticompetitive effect may continue well beyond one year in the absence
of enforcement action.3

In 2001, we achieved a positive
outcome in approximately 94% of the
challenges initiated by the agency (e.g.,
court orders in litigated cases and
negotiated settlements), exceeding by a
significant margin our goal of an 80%
success rate. This level of success was
due, in part, to the high percentage of our
cases that were resolved through consent
agreement. This does not diminish the
accomplishment, however, because we are
more likely to obtain settlements when the
parties see that our case would likely
prevail in court. We realistically do not
expect to succeed in every litigated case,
however. A law enforcement agency that
prevails in every litigated matter may do so
because it pursues only the cases that are
easiest to win. Particularly given the FTC’s
responsibility to aid in antitrust policy
development, we will sometimes undertake
difficult cases with no clear precedent.
The FTC will continue to bring law enforcement actions where it has reason to believe

3

For mergers, the default estimate is that an
anticompetitive price increase would also amount
to 1%, but would last for two years instead of one.
While it would probably be defensible to use the
two year standard for nonmerger matters, the
decision to use only one year, at least initially,

reflects our cautious approach in measuring
consumer savings, as well as the absence of an
authority comparable to the Horizontal Merger
Guidelines in the nonmerger area.

28

2001 is consistent with the necessary shift
in focus toward mergers in recent years
due the record-setting number and dollar
value of proposed transactions. With the
merger/nonmerger balance shifting back
toward historical norms, we expect greater
nonmerger savings in 2002 and beyond.
As explained elsewhere, the level of merger
activity in 2000 resulted in the opening of
only 25 nonm erger investigations that
year. We record consumer savings only
when a final result is achieved. Since
nonmerger antitrust matters typically take
as much as a year or more to complete
(more if litigation is involved), fewer
investigations begun in Year 1 will likely
result in fewer completed cases in Years 2
and 3. Thus, the nonmerger consumer
savings achieved in 2001 resulted from
only five cases, an unusually low number.
With more investigations “in the pipeline,”
we anticipate a larger number of concluded nonmerger cases (and associated
consumer savings) in 2002. We will
reevaluate our target as our experience
with this new performance measure grows.

that the merger or practice in question is
unlawful and harms consumers, even
where litigation risks may exist. Thus, in
years in which litigated cases make up a
larger proportion of the total number of
resolved cases, our success rate may be
closer to the target of 80%.
Our consumer savings of $2.5 billion in
merger cases exceeded by a substantial
margin the $800 million in average annual
savings needed to reach our five-year goal
of $4 billion. We raised the annual target
from $500 million to $800 million last
year, and this year’s performance suggests
that a further increase may be in order.
As noted in our last performance report,
however, the amount of consumer savings
achieved in any one year is highly dependent on the pattern of corporate merger
activity, including the size and nature of
transactions proposed in that year.4 For
example, a single case accounted for more
than half of the consumer savings figure in
2001. Accordingly, we do not anticipate
further raising the annual average performance target on this measure at this
time.

Overall, we obtained a total of $2.65
billion in combined merger and nonmerger
savings, a figure that places the FTC w ell
on track to achieve the combined five-year
goal of $5 billion. While shifting patterns of
merger activity may affect how FTC
antitrust resources are utilized, and
consequently the output according to
merger and nonmerger measures, what
remains unchanged is that the FTC’s
antitrust enforcement program returns to
consumers many dollars in savings for
every dollar in agency operations.

We obtained $157 million in consumer
savings in nonmerger matters in 2001.
Again, we cautioned last year that differences in opportunities from year to year
would likely result in variable results on
this measure.5 Although the 2001 result is
somewhat less than the yearly average of
$200 million needed to achieve the fiveyear goal, we will still reach that goal with
a slightly higher average savings rate over
the remaining four years. The result for

4

See Federal Trade Commission Performance
Report for Fiscal Year 2000 at 23 (Mar. 31, 2001).
5

Id. at 24.

29

OBJECTIVE 2.3

P REVENT C ONSUMER I NJURY
THROUGH EDUCATION
ceu tical marketplace); conferences,
hearings, and workshops (such as the
August 2001 conference on factors
affecting the price of refined petroleum
products); advisory opinions (such as a
December 2000 letter to a hospital group
advising on the applicability of the
Robinson-Patman Act to hospital sales of
pharmaceuticals to their retired employees); economic research papers (such
as a January 2001 study of geographic
markets in hospital merger cases); and
reports (such as a September 2001 report
on competition and consumer protection
i s su e s
arisin g
from
ele ctricity
deregulation).

In addition to its law enforcement
activity, the FTC provides substantial information to the business community and
consumers about the role of antitrust laws,
and businesses’ obligations under those
laws.

Strategies

The FTC uses education and outreach
to help prevent consumer injury, increase
business compliance, and augment our
law enforcement efforts. We pursue this
strategy through guidance to the business
community; outreach efforts
to federal, state and local
Performance Measure 2.3.1
agencies, business groups
Quantify number of education and
and consumers; development
outreach efforts.
and publication of antitrust
FY 2001 Target: Determine baseline
guidelines and policy stateFY 2001 Actual: 141
ments; and speeches and
publications. Through these
Performance Measure 2.3.2
Quantify number of hits on antitrust
mechanisms, we publicize the
information on FTC web site.
antitrust law and our enforcement intentions, with the
FY 2001 Target: Determine baseline
FY 2001 Actual: 2.6 million
likely result of deterring
future anticompetitive behavior.

As a complement to our
enforcement activity, we
also advise other federal
and state government officials about the possible
effect that various regulatory proposals may have
on competition (such as a
recent letter commenting
on the effect of restricting
non-attorneys from participation in real estate
closings). This approach is broader than
antitrust because it involves persuasion on
policy issues where competition is
involved, but the antitrust laws may not
necessarily reach.

Our law enforcement efforts are also
made more effective by public awareness
of what types of conduct are likely to be
challenged as law violations. Through
press releases of FTC actions and publication of related materials on the agency
Web site, the public facts underlying FTC
actions provide bases for companies to
evaluate the likelihood that other transactions would likely face challenge.

Performance Measures
and Results
In 2001, we used two new performance
measures to more directly reflect our effectiveness in preventing consumer injury
through education and outreach to the
public. Education serves to leverage the
FTC’s enforcement resources by explaining

In addition, the FTC educates the
public through Congressional testimony
(such as the Commission’s May 2001
testimony on the effect of patent settlements on competition in the pharma30

Internet to disseminate information about
antitrust and other competition-related
matters plays an integral role in the FTC’s
education and deterrence efforts, permitting the agency to convey a wealth of
information quickly, simply, and inexpensively to the business and legal
communities, and to consum ers. This
measure more directly reflects our effectiveness because it is not based on FTC
actions, but on the actions of our
constituencies. That is, the level of activity
on our Web site depends to a large degree
on the scope, utility, and reliability of the
information made available there. People
will revisit the site to the extent that what
they find there is of value. But if the
material presented were irrelevant, difficult
to understand, or misleading, then interest
in the site inevitably would diminish.
Because we did not systematically collect
this information before 2001 we have not
set a performance target yet, but we have
collected data to use as a baseline in
evaluating future performance. In 2001,
we recorded more than 2.6 million hits on
antitrust information on the FTC’s Web
site.

the scope of the antitrust laws, demonstrating that the FTC is active in bringing
enforcement actions against certain types
of mergers and practices, and signaling
future enforcement intentions – all of
which serve to deter harmful marketplace
activity. Just as citizens benefit from the
effect of the local “cop on the beat” in
deterring crime, consumers ultimately
benefit when the FTC makes its presence
visible.
We measured our effectiveness in educating the public about the antitrust laws
and the FTC’s enforcement activities,
policies, and priorities by tracking the
number of public outreach efforts in
written (e.g., guidelines and policy
statements) or oral (e.g., speeches and
testimony) form. Although this measure of
activity does not directly relate to outcomes in the marketplace, there is
evidence that success in communicating
enforcement priorities has a strong impact
on the level of anticompetitive activity
taking place.6 Because we did not systematically collect this information before
2001, we have not set a target yet but have
collected data to use as a baseline in evaluating future performance. In 2001, we
completed a total of 141 separate public
outreach efforts.

Performance Assessment
and Future Trends
We will compare future performance on
the two new measures against the performance in 2001. Based on experience, we
may refine one or both measures to
increase their utility in measuring and
motivating our performance. As described
above, our public education efforts take
many different forms, and thus are not
fully revealed by the summary statistics.
The FTC is strongly committed to the
importance of education and outreach and
will continue to place emphasis on and
expand our activities in this area in future
years.

Second, with the importance of the
Internet as a vital source of inform ation in
today’s society, we believe that the number
of “hits” on antitrust education and
outreach material on the FTC’s Web site is
an important indicium of our success in
educating the public and in stimulating
public interest in our work. Use of the

6

See American Bar Association Section of
Antitrust Law, The State of Federal Antitrust
Enforcement - 2001, 11 (Jan. 2001) (“. . . private
compliance efforts are a critical prophylactic
against anticompetitive behavior, and the
effectiveness of private compliance efforts is
directly affected by the nature and clarity of the
communication of enforcement priorities.”).

31

Appendix
FY 2001 Performance Measures
FY 2001
Target

FY 2001
Actual

Met or
Exceeded

Goal 1: Prevent fraud, deception, and unfair business practices in the marketplace.
Objective 1.1–Identify fraud, deception, and unfair practices that cause the grea test consum er injury:
Measure 1.1.1: Annual number of consumer com plaints and
inquiries entered into database.

350,000

430,000

T

Objective 1.2–Stop fraud, deception and unfair practices through law enforcement:
Measure 1.2.1: Dollar savings for consumers from FTC
actions which stop fraud.

$400
m illion

$487
m illion

T

Measure 1.2.2: T ota l expenditures of d eceptive or u nfair
advertising campaigns stopped.

$300
m illion

$86
m illion

see text

10
m illion

15
m illion

T

Objective 1.3–Prevent consumer injury through education:
Measure 1.3.1: Number of education publications
distributed to or accessed electronically by consumers.

Goal 2: Prevent anticompetitive mergers and other anticompetitive business practices in the
marketplace.
Objective 2.1–Identify anticompetitive mergers a nd practices that caus e the greatest cons ume r injury:
Measure 2.1.1: P ercent of HSR second req uests res ulting in
enforcement action.

50%

68%

T

Measure 2.1.2: Number of nonmerger investigations opened
per year.

45 to 70

56

T

Ob jective 2.2–Stop antico mp etitive m erge rs an d pra ctices thro ugh law e nforc em ent:
Measure 2.2.1: Positive outcome of cases brought by FTC
due to alleged violations.

80%

94%

T

Measure 2.2.2: Dollar savings for consumers resulting from
FTC actions stopping anticompetitive mergers.

$800
m illion

$2.5
billion

T

Measure 2.2.3: Dollar savings for consumers resulting from
FT C actions stopping antico m petitive nonm erge r activity.

$200
m illion

$157
m illion

see text

Measure 2.3.1: Quantify number of education and outreach
efforts.

determine
baseline

141

T

Measure 2.3.2: Quantify number of hits on antitrust
information on FTC W eb site.

determine
baseline

2.6 million

T

Objective 2.3–Prevent consumer injury through education:

32