View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.


The Federal Trade Commission (FTC)
is an independent law enforcement
agency and the only federal agency with
both consumer protection and
competition jurisdiction over broad
sectors of the economy. We strive to
enhance the smooth operation of the
marketplace by eliminating acts or
practices that are unfair or deceptive.
The FTC protects American
consumers in both domestic and world
marketplaces. Our national experience
demonstrates that competition among
producers and accurate information in
the hands of consumers yields products
at the lowest prices, spurs innovation,
and strengthens the economy.

Our Strategic Plan defines the FTC’s
Vision and Mission in two Goals:

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


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

These Goals, with their corresponding
Objectives and Performance Measures,
help us assess our Performance.


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.


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.


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


Prevent anticompetitive mergers
and other anticompetitive
business practices in the

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

OBJECTIVE 2.2 Stop anticompetitive mergers
and practices through law

OBJECTIVE 1.3 Prevent consumer injury
through education.

OBJECTIVE 2.3 Prevent consumer injury through

FY 1999 Performance Measures and Targets

T met or exceeded

Measure 1.1.1: Cumulative number of
consumer complaints and inquiries entered
in database.
Target: 200,000
Actual: 398,558 T

Measure 2.1.1: Average number of days
for review of HSR-reported transactions.
Target: 20
Actual: 19 T
Measure 2.1.2: Number of nonmerger
investigations opened per year.
Target: 45-70
Actual: 45 T

Measure 1.2.1: Dollar savings for
consumers from FTC actions which stop
Target: $200 million
Actual: $454.1 million T
Measure 1.2.2: Percentage of targeted
industry brought into compliance through
law enforcement and self regulation.
Target: 50-75%
Actual: 78% T

Measure 2.2.1: Positive outcome of cases
brought by FTC due to alleged violations.
Target: 80%
Actual: 80% T
Measure 2.2.2: Dollar savings for
consumers resulting from FTC actions.
Target: $200 million
Actual: $1.2 billion T
Measure 2.2.3: Average time, in months,
from proposed consent orders to
Target: 9
Actual: 4 T

Measure 1.3.1: Number of education
publications distributed to or accessed
electronically by consumers.
Target: 7.25 million
Actual: 8.589 million T

Measure 2.3.1: Identify and survey FTC
"customers" in the marketplace.
Target: design survey
Actual: design survey T

FY 1999 Assessment

actions to stop fraud and prevent
anticompetitive mergers, achieving an
estimated consumer savings of $14
for every $1 spent on agency
operations. In addition, the FTC’s
presence in the marketplace deters
many fraudulent activities or
anticompetitive mergers that could
result in substantial, though
unmeasurable, consumer savings.

The results of our FY 1999 activities
reached, and in most cases exceeded,
each of our Performance Measure
Targets. Highlights of our Performance
and its effect on consumers and
businesses are:

Saving consumers an estimated $1.7
billion in 1999 from law enforcement


Protecting consumers and businesses

from anticompetitive mergers
which raise prices and harm
consumer confidence by reviewing
an unprecedented number and
size of proposed mergers and


“Guidelines for Collaboration Among


Bringing 61 Internet-related fraud
enforcement actions in 1999, over
100 since 1994. These actions have
targeted more than 300 corporate
and individual defendants on behalf
of millions of online consumers and
small businesses. Further, these
actions have stopped some of the
newest, as well as the traditional,
types of fraud used on the Internet to
con consumers.

Two developments have greatly
increased the demands on the FTC – the
continuous growth of the Internet and
the dramatic increase in the number and
size of corporate mergers.
Use of the Internet has grown
exponentially since commercial Web
browsers first became available in 1994 –
123 million Americans now use the
Internet. Internet purchasing also is
booming and is forecasted to skyrocket
from $20 billion in 1999 to $184 billion in
2004. The FTC is working to protect
consumers and businesses against new
high-tech frauds that use the Internet to
defraud consumers. Halting cyberfraud
and reviewing Internet-related issues to
ensure continued growth of the new ecommerce medium during the early years
of the Internet's existence already is
challenging us and taxing our resources.

Receiving and processing nearly
400,000 consumer complaints and
inquiries into our Consumer
Information System database since
1997, and sharing fraud complaints
with over 220 law enforcement
agencies via Consumer Sentinel, a
secure Web site. Many complaints are
now received through the Internet
and a new, toll-free consumer
helpline, 1-877-FTC-HELP,
implemented in July 1999. This
helpline allows individuals
throughout the United States to call
with questions or complaints and
speak to trained counselors.


Educating consumers and businesses
about their rights and responsibilities, and alerting them to potential
frauds, by distributing 8.6 million
educational publications in print and
online and expanding our media
outreach programs.


Similarly, the corporate merger wave
continues into its tenth straight year
with the number of reported mergers
rising from 1,529 in 1991 to 4,642 in
1999. While this restructuring may be
necessary for companies to compete in
the new global, high-tech marketplace,
antitrust review is necessary to identify
and stop those combinations that could
diminish competition in specific markets
as this restructuring proceeds.

Advancing the public understanding
of the merger reporting process and
its importance to consumer
confidence and the economy by
responding to nearly 41,000
telephone inquiries and issuing draft

While the number of mergers has
tripled in the past decade the dollar
value of commerce affected by these
mergers is on an even steeper trajectory,
increasing eleven-fold in total value
during this period, from $169 billion to

$1.9 trillion. Overall, merger transactions
are increasingly larger and significantly
more complex, requiring more exacting
analysis when they raise competitive
issues. As a result, merger investigation
and litigation are more
resource-intensive than before.

of our Performance Measures under
Objective 1.2 were better expressed as
one aggregate Measure that more
succinctly captures the results of our
efforts. Also, as part of our Strategic
Planning, our Inspector General (IG)
reviewed the Performance Measures and
found that the methodology used to
collect certain Performance data could be
improved to increase the accuracy and
consistency of the information. The IG
recommends that, in order to prevent
this weakness in the future, the FTC’s
GPRA Task Force define the rationale
behind each of the Performance
Measures by clearly articulating how
consumers/businesses are better off
when the FTC meets or exceeds its
Performance Targets. We will address
those concerns as we continue to reevaluate the validity of our Performance
Measures and Objectives.

To meet the challenges of the
Internet, we have pursued a
comprehensive program consisting of
systematic analysis of the marketplace,
law enforcement – often in conjunction
with federal, state, and local partners –
and consumer and business education.
To meet the merger wave challenge, we
work cooperatively with industry and the
antitrust bar to assess what changes can
be made in merger investigations to
make the process efficient as possible.
Also, we have undertaken a number of
internal reforms to expedite merger
investigations and provide parties with
more complete information on the issues
that give rise to an investigation.

Although we face mounting
challenges – especially from the
continuing growth of the Internet and the
merger wave – we are able to address
them more effectively because of
Strategic Planning. Through this process
we have assessed, and will continue to
assess, the challenges and opportunities
facing the FTC and will position ourselves to be as innovative and aggressive
in protecting consumers and businesses
from unfair or deceptive acts or

Strategic Planning –
Continuing the Process
A major part of our Strategic Planning is to continually re-evaluate our
Objectives, Performance Measures, and
Performance Targets to ensure that we
are measuring the most appropriate
indicators of our Performance and that
we are correctly capturing this data. For
example, in 1999, we concluded that two




The FTC is the federal government’s
primary consumer protection agency.
While most federal agencies have jurisdiction over a specific market sector, we
have broad law enforcement authority
over nearly the entire 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 interconnected objectives to reach this broadreaching goal.

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


One of the greatest challenges we
face is safeguarding consumers in the
new electronic marketplace so they will
have the same confidence in this market
as they should in the traditional
marketplace. The Internet has the
potential to deliver traditional goods and
services, often more conveniently, faster,
and at lower prices than traditional
media. 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 enabling consumers to tap into
rich sources of information that they can
use to make better informed purchasing

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


our consumer protection statutes to
ensure that consumers have accurate
and complete information for their
purchasing decisions. We target our
education efforts to give consumers the
information they need to protect
themselves from injury.

Prevent consumer injury through

First, we identify practices that cause
consumer injury by analyzing the
consumer complaint data collected in our
Consumer Information
Internet Cases and Percentage of
System database and
Consumer Protection FTE
monitoring the market61
% of Consumer Protection FTE
place, including the
# of Internet Cases
Internet. We then use this
information to target law
enforcement efforts. Our
law enforcement program
aims to stop and deter
fraud and deception and to
increase compliance with

















There is real risk, however,
that these benefits may not
be realized if consumers
associate the Internet with
fraud operators. Fraud on
the Internet is an enormous
concern for the FTC, and it
has prompted a vigorous
response using all the tools
at our disposal, including

law enforcement and education.




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

of weeks – to stop practices before they
can do more harm to consumers.
In addition to receiving and analyzing
consumer complaints, we monitor the
growing marketplace by systematically
surfing the Internet to identify Web sites
engaged in questionable practices. To
date the FTC has led or coordinated over
20 Surf Days, uncovering some 4,000
questionable sites. We also hold public
hearings and workshops to help identify
emerging consumer protection issues in
the global economy.


To keep abreast of consumer
protection problems in the marketplace,
the FTC is collecting and analyzing data
from many sources. In 1997, we
established the Consumer Response
Center to receive consumer complaints
and inquiries via mail, telephone, and the Internet. A
Measure and
Performance Measure 1.1.1
toll-free number established
Cumulative number of consumer
in 1999 (1-877-FTC-HELP)
complaints and inquiries entered
into database.
has made the agency even
We assessed our 1999
more accessible to
FY 1999 Target:
impact by the total number
consumers across the
FY 1999 Actual:
Met or Exceeded:
of consumer complaints and
nation. Partners such as the
inquiries in the Consumer
National Fraud Information
Information System
Center of the National Condatabase. At the end of 1999, these
sumers League, Better Business
entries totaled nearly 400,000 – almost
Bureaus, and the Canadian fraud
double our target, which was established
database, PhoneBusters, also provide us
in 1998. This was due to the increasing
with the consumer complaint data they
number of complaints received via the
collect. The information is entered into
Internet and the new toll-free telephone
the Consumer Information System
number, and the growing number of
database and analyzed by FTC staff to
partners contributing complaints. On the
identify trends and patterns, new scams,
basis of this data – including a spike in
and companies engaging in fraudulent,
Internet fraud complaints – we were able
deceptive, and unfair business practices.
to identify the top consumer frauds of
This information is used to target FTC
1999 and effectively target our law
law enforcement and education efforts.
enforcement and education to these
Also, the fraud complaints collected are
areas, including online auction fraud,
shared with over 220 other law
pyramid schemes, unauthorized billing
enforcement agencies across the United
(“cramming”), and travel scams. Our
States and Canada, via Consumer
better-than-expected results in capturing
Sentinel, a secure Web site. The constant
consumer information has led us to
input and analysis of fresh complaint
revise our performance targets for the
data have allowed the FTC to move
next few years.
quickly – in some instances in a matter

database dedicated to identity theft in
response to the new responsibilities we
have been given under the Identity Theft
and Assumption Deterrence Act of 1998.
The Commission will receive and record
Performance Assessment
complaints by victims of identity theft,
and Future Trends
refer the complaints to the appropriate
national consumer reporting and law
In our effort to identify fraud, decepenforcement agencies, analyze the
tion, and unfair
complaint data to
business practices,
Cumulative Number of Consumer Complaints identify trends, and
we focus law
undertake consumer
and Inquiries Entered Into Database
enforcement and
education about the
Cumulative Complaints & Inquiries (in thousands)
education efforts
identity theft
on the most
serious consumer
Assessing our
problems. We
performance using
search our datathe number of
base for
entries in our
information that
consumer complaint
enables us to
database has proven
detect illegal
to be a reasonable
2000 Est.
2001 Est.
practices and
indicator of our
respond quickly to
ability to identify
prevent consumer injury. By collecting
consumer problems. Using the data to
data from, and sharing it with, our
identify trends and patterns, new scams,
partners, we are able to enhance the
and individual companies engaged in
effectiveness of our own efforts and those
illegal activities has quickly become the
of law enforcement agencies across the
bedrock of our ability to effectively target
country and in Canada. To make the
our law enforcement and education
database even more valuable, we plan to
efforts. Also, working with our partners
increase our collection of information
across the country and in Canada to
from consumer agencies in other
collect data in one central location
countries. Building on our experience
increases the value of each cluster of
with Canadian members of Consumer
data by establishing patterns and giving
Sentinel, we will work toward dataus a broad view of what consumers are
sharing agreements, for example, with
facing in the expanding, global
the members of the International
marketplace. The more data we have, the
Marketing Supervision Network (IMSN),
better able we are to see trends and
an organization consisting of consumer
coordinate activities with other law
protection agencies from more than two
enforcers. The database allows us and
dozen countries. The IMSN’s mission is
our law enforcement partners to identify
to share information about cross-border
and develop cases against fraudulent
commercial activities that could affect
operators more quickly and coordinate
consumer interests and to encourage
our efforts to achieve greater impact on
international cooperation among law
practices that cause consumer injury.
enforcement agencies.
For consumers, having one centralized,
toll-free number to call gives them the
We are designing a compatible
opportunity to share their experiences

and contribute to law enforcement efforts
to stop wrongdoers.

useful in identifying bad practices; the
data gleaned from recent entries will
determine the targets of current law
enforcement and education efforts. We
will also examine the potential for
duplication of complaints; for example,
an individual may send the same
complaint to us and several of our
partners. At this time, we do not believe
this is to be a significant problem.

When we revise our five-year strategic
plan, we will revisit this performance
measure to consider moving to an
annual count of database entries versus
a cumulative one. The use of a
cumulative count for 1999 is valid since
the database has been in existence for
approximately two years. However, as the
data age, earlier entries will be less



able to target our law enforcement to
areas that create the greatest risks to
consumer health, safety, and economic
well-being. We often work with industry
and interested groups to encourage selfregulation and private initiatives, where
appropriate, in lieu of regulation or law

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


To combat fraud, we focus on the
Performance Measures
areas identified through our
Consumer Information
and Results
Performance Measure 1.2.1
System database and our
Dollar savings for consumers from
monitoring of the traditional
FTC actions which stop fraud.
Our goal in 1999 was to
and electronic marketplaces.
save consumers over $200
FY 1999 Target:
$200 million
Attacking telemarketing fraud
million by stopping fraud.
FY 1999 Actual:
continues to be a priority, as
We estimate that we more
Met or Exceeded:
does protecting consumers
than doubled that amount
from more traditional scams
Performance Measure 1.2.2
with our actions saving
that have found new life on
Percentage of targeted industry
consumers approximately
brought into compliance through
the Internet, including
$454 million. One large
law enforcement or self regulation.
health-related fraud. The FTC
scheme with estimated
also is moving to protect
FY 1999 Target:
50% - 75%
annual fraudulent sales of
FY 1999 Actual:
consumers and business
$180 million, and three
Met or Exceeded:
against new high-tech frauds
others with estimated sales
through our Internet Rapid
of close to $50 million each,
Response Team.
boosted our impact to an
One of the most effective
unanticipated level. By
tools in the battle against fraud has been
publicizing our successes, we seek to
the law enforcement sweep –
increase consumer confidence in the
simultaneous law enforcement actions
marketplace. Consumer savings are
against numerous defendants nationwide
measured on the basis of the estimated
that focus on a particular, widespread
annual fraudulent sales of defendants in
type of fraud. Each sweep is supported
the 12 months prior to filing a complaint.
by a creative education program aimed at
The law enforcement actions included in
preventing future losses to the public.
this measure were taken against
The FTC has led 50 sweeps in the past
fraudulent operators, who range from
five years that have had a substantial
individuals or small companies to scam
impact on reducing fraud and raising
artists operating large schemes on the
consumer awareness.
Internet. Our experience in most cases is
that once we file a complaint in federal
In the nonfraud area, we work to
district court and obtain a court order,
ensure that there is compliance with our
the defendants stop their fraudulent
consumer protection statutes. Using
practices; if they fail to comply, they are
information from our database and
subject to contempt actions. Thus, in
monitoring national advertising, we are

stopping these frauds, we stop further
consumer losses to these defendants.

1999, over 18,600 complaints – roughly
24% of all fraud complaints logged in
that year – related to online fraud and
deception. We expect this number to
continue to grow, and in response, we
will increase our efforts to slow online
fraud and prevent consumer injury.

In the nonfraud area, our goal was to
increase compliance with the laws
against deceptive and unfair practices,
and thereby ensure that consumers have
more accurate and complete information
for their purchasing decisions. We target
industries where misleading or unfair
practices are widespread, and work to
significantly improve the level of
compliance through law enforcement or
self-regulatory programs over a two-year
period. In 1999, we planned to bring 50%
to 75% of the noncomplying members in
targeted industries into compliance
through law enforcement or selfregulatory programs. In 1997, we
targeted industries whose major
members were not in compliance with
the law, including: auto leasing, online
service providers, engine treatments, air
cleaners, credit counseling, online
advertising directed to children,
refractive eye care surgery, and alcohol
advertising. By taking law enforcement
actions and encouraging self-regulatory
programs across these industries, we
were able to achieve an average increase
in compliance of 78% . This percentage is
slightly higher than anticipated because
we achieved a 98% to 100% compliance
rate in three of the targeted industries.

We are well on the way to achieving
our goal of saving consumers $1 billion
over five years; our goal in fiscal year
2000 is to save consumers over $250
million. We do not anticipate repeating
the savings reached in fiscal year 1999,
where one scheme alone had estimated
annual fraudulent sales of $180 million.
As our expertise in high and new
technologies grows, we will be better able
to detect and deter Internet fraud before
these schemes take hold. By stopping
fraudulent operators early, measured
savings in each case may fall; however,
the true savings to consumers will be
enormous. This effort, combined with
strategies such as law enforcement
sweeps, demonstrates that our commitment to preventing consumer injury is
strong and effective.
While fighting fraud is a major law
enforcement priority, we also focus
resources on compliance – both offline
and online – with traditional advertising
law and FTC Rules and Guides. As
reported, directing our law enforcement
and self-regulatory efforts to industries
targeted in 1997 was an effective
strategy. We are in the second year of
evaluating results in industries targeted
in 1998, and have begun efforts to
increase compliance in those targeted in
1999. Early indicators suggest that we
will reach our goal for 2000 and 2001.
Concentrating efforts on industries
identified by our database and
marketplace monitoring is proving to be
an effective tool in significantly improving
compliance by industry members and
preventing consumer injury.

Performance Assessment
and Future Trends
The boom in e-commerce has yielded
fertile ground for fraud. Internet
technology is the latest magnet to draw
opportunistic predators. The rapid rise in
the number of consumer complaints
related to online fraud and deception
bears this out: in 1997, the FTC received
fewer than 1,000 Internet fraud
complaints to our database; a year later,
the number had increased eightfold. In



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

Performance Measure
and Results


We measured our impact in
the education area by
tracking the number of
publications we distributed
to the public. In 1999, the
7.25 million
8.589 million
FTC distributed
approximately 8.6 million
publications: 6 million print
publications and 2.6 million
through the FTC Web site. We surpassed
our goal of 7.25 million publications by
well over 1 million. We can attribute our
high dissemination rates to increased
marketing activity to and among our
“customers” and partners, and the many
publications sent directly to consumers
who call, write, or e-mail our Consumer
Response Center. In addition, the
number of publications accessed by
consumers through our Web site
increased by 1 million over 1998. Our
reach nationwide was extended by more
aggressive outreach and promotion of
FTC materials and our new toll-free
number, and the increasing number of
consumers who are online. We used
information from our database to target
our education programs to problem
areas, such as Internet fraud; health
services and products fraud including
online pharmaceuticals, home testing
kits, dietary supplements, and weight
management; and home improvement
and direct mail fraud. The growing
number of telephone calls and the
increased use of our Web site
demonstrate that our efforts have
created a greater awareness of consumer
issues. In turn consumers will, to some
extent, be able to protect themselves

Performance Measure 1.3.1
Number of education publications
distributed to or accessed
electronically by consumers.

Our database helps us
focus our education efforts
on areas where fraud,
FY 1999 Target:
deception, unfair practices,
FY 1999 Actual:
and information gaps are
Met or Exceeded:
causing the greatest injury.
Each major law enforcement
initiative is supported by a
comprehensive and creative self-help
education program. Consumers are given
the tools they need to spot potentially
fraudulent and other illegal promotions,
and businesses are advised about how to
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 consumers, for example, through
our Web sites, online banner public
service announcements, and online
distribution of “news” consumers can
We coordinate with hundreds of
private and public partners to provide
information about specific promotions,
products, and services. In 1999, the FTC
took the lead in organizing the first
National Consumer Protection Week, an
initiative sponsored by a broad coalition
of public and private consumer
protection advocates. In addition to the
FTC’s own Web site (,, which the FTC
initiated and continues to manage, offers
one-stop access to consumer information
from 135 federal partners.


against fraud and deception in the

distributed by our customers and
partners, and downloaded from the
Internet. In the future, we expect the
number of print publications we
distribute to decline and the number of
publications accessed through the
Internet to increase as more consumers
and businesses go online. The growth in
the number of publications viewed online
in 1996 and 1999 (140,000 versus 2.5
million) tells the story of the Internet’s
coming of age as a mainstream medium
and certainly its importance to any largescale dissemination effort. Capitalizing
on this trend, we will increase our use of
the FTC’s Web site,, and the
multi-agency Web site,, to efficiently and
effectively reach consumers, businesses,
law enforcement officials, and the media.

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 is integral to the FTC’s
education, deterrence, and enforcement
efforts and has allowed the agency to
reach vast numbers of consumers and
businesses quickly, simply, and at low
cost. The FTC has been at the forefront
of using the Internet to educate and
empower consumers. This trend will
accelerate in the future.

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 more

Our measure of the number of
publications distributed is an accurate
indicator of our impact in educating
consumers, although it does not fully
capture the millions of FTC publications




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. Thus, it is our
goal to protect consumers from such
threats and promote vigorous
competition by preventing mergers that
would diminish competition, and other
anticompetitive practices. We apply
three objectives to achieve this goal.

given circumstance the activity in
question, such as a merger, may be
either beneficial – by enabling sellers to
be more 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
consumers. Thus, indiscriminate or illconsidered intervention into the
marketplace may do more harm than
Second, once we identify an
anticompetitive merger or business
practice, we take enforcement action
under the antitrust laws to prevent it,
either through an administrative
challenge or in federal court. In many
instances we are able to reach a consent
agreement with the affected parties that
prevents the anticompetitive activity.

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

Third, we seek to prevent
anticompetitive activity by educating
business and consumers about the
First, we identify anticompetitive
antitrust laws. Increased knowledge and
mergers and business practices through
understanding on the part of businesses
the application of sophisticated economic
facilitates their efforts to comply with the
analysis and
law. Increased
thorough factual
knowledge and
Merger Transactions
investigation to
understanding on
distinguish between
the part of
4,728 4,642
Merger Transactions Reported
conduct that
consumers enables
threatens the
them to identify
operation of free
markets and
activity more readily
conduct that
and to bring such
1,529 1,589
promotes and
activity to our
advances their
attention for
operation. This
step is critical
enforcement action.
because in any
1991 1992 1993 1994 1995 1996 1997 1998 1999


We also use trade press and other
news articles, consumer and competitor
complaints, hearings, economic studies,
and other means to identify potentially
anticompetitive practices other than
mergers that may harm consumers. In
particular, we focus on emerging trends
in the economy, technology, and the

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

To achieve this objective, the FTC (1)
identifies the mergers and business
practices that should be examined for
antitrust consequences, and (2) conducts
an inquiry appropriate to the
circumstances of each matter to
determine whether to pursue
enforcement action. As a collateral
aspect of this objective, we try to conduct
our inquiry in a way that minimizes any
cost or inconvenience to

Performance Measures
and Results

We measure our success in
identifying anticompetitive mergers by
the average number of days we devote to
reviewing actions reported to us under
the HSR premerger
notification program. This
measure is important
Performance Measure 2.1.1
Average number of days for review
because it reflects the
The premerger
of HSR-reported transactions.
efficiency with which we
notification requirements of
conduct these reviews.
FY 1999 Target:
20 days
the Hart-Scott-Rodino (HSR)
FY 1999 Actual:
19 days
When the review of reported
Met or Exceeded:
Act provide us the primary
actions is completed quickly
means for identifying
Performance Measure 2.1.2
and efficiently, we conserve
potentially anticompetitive
Number of nonmerger
available resources that can
investigations opened per year.
mergers. The FTC’s
be devoted to other
Premerger Notification Office
FY 1999 Target:
45 - 70
important activities. In
reviews all filings made for
FY 1999 Actual:
addition, a prompt review
Met or Exceeded:
proposed mergers,
better serves economic
acquisitions, and joint
growth, because it allows
ventures and performs
businesses to proceed with
preliminary antitrust review
mergers and acquisitions that pose no
for every transaction that is filed with the
antitrust issues with minimal delay.
FTC. We work to complete these reviews
as quickly and as efficiently as possible,
Despite a high volume of reported
both to conserve our available resources
transactions, we continued our emphasis
to devote to other work, and to minimize
on expediting our preliminary reviews.
the delay imposed on businesses as a
We established as a goal an average
result of the HSR requirements.
review time of 20 days for transactions
reported under HSR. We were able to
exceed that goal in 1999, completing our

review of HSR reported actions in an
average of 19 days.

We also measure our success in
identifying anticompetitive practices that
cause consumer injury by counting the
number of nonmerger investigations
opened during the year. This measure
directly reflects our enforcement activity.
While we do not take enforcement action
in every matter we investigate, because
we often conclude that the practice in
question is not anticompetitive, it is
axiomatic that a thorough investigation
always precedes any order to a business
that it must “cease and desist” a
particular anticompetitive activity.

In 1999, we received notification of
4,642 proposed transactions in
accordance with the HSR notification and
filing requirements. This volume of
transactions reflects the ongoing wave of
merger activity that has been taking
place over the past several years. The
number of reported transactions in 1999
represents a decrease of approximately
2% from the 4,728 transactions reported
in 1998, but remains at a level more
than three times the number of reported
merger transactions in 1991.
Mergers reported under the HSR Act
vary tremendously in their complexity
and potential anticompetitive effect. We
continue to review and prepare an
analytical summary of each reported
transaction. In most cases, the agency
can make a reasonable judgment about
whether a merger has the potential to be
anticompetitive or not within a few days
of filing, simply by reviewing these
analyses, based on materials filed with
the HSR notification. The agency’s
Merger Screening Committee, comprised
of senior officials of the Bureaus of
Competition and Economics, reviews
those transactions that raise more
difficult questions. If the Committee
determines that more information is
needed in a matter, it calls for a more
extensive investigation, often including
the issuance of a request for additional
information from the parties.

We established a goal of opening 45
to 70 nonmerger investigations over the
course of the year. In 1999, we opened
45 such investigations, a number within
the range of our goal, albeit at the lower

Performance Assessment
and Future Trends
We were able to exceed one
performance goal – reducing the average
review time for HSR reported
transactions – and to meet the other
performance goal – initiation of
investigations into potentially
anticompetitive activity other than
mergers – despite the continuation of the
record-setting pace of corporate mergers
and acquisitions. In the future,
continuing to assess each reported
transaction through our structured
review process, and to do so as quickly
and efficiently as possible, will continue
to be among our highest priorities.

In 1999, we allowed 3,148 of the
reported transactions, approximately
70%, to proceed before the end of the
statutory 30-day waiting period. From
all of the transactions, we opened 278
preliminary investigations and issued
requests for additional information in 45
proposed transactions to obtain
information to assist the attorneys and
economists in conducting their

We remain cognizant of the
continuing potential for anticompetitive
activity not involving mergers and of the
importance of our efforts to identify such
activity. Although we met our goal on
this performance measure, two factors

limited our ability to exceed the
minimum level. First, the continuing
high level of merger activity, described
above, demanded an extremely large
share of the resources devoted to our
maintaining competition mission.
Second, of the resources remaining for
nonmerger investigation and
enforcement, a substantial proportion
were properly devoted to preparations for
administrative litigation in the Intel Corp.
case, which was among the most
important nonmerger matters addressed
by the agency in some time. In the
future, we expect, at a minimum, to
maintain the historic level of nonmerger
investigations, even if the current level of
merger activity continues, and to
increase our activity when mergerrelated resource demands subside.

In addition to achieving these specific
performance goals, we continue our work
to accomplish this objective through
economic research designed to improve
our understanding of those market
situations where antitrust activity would
result in a more competitive market. We
concluded a study of the pharmaceutical
industry to help us understand the rapid
changes taking place in this industry and
what these changes might mean for
antitrust policy; as well as studies of the
effects of franchise transfers and mergers
in the carbonated soft drink bottling
industry. Studies of how the entry of
branded generic drugs has influenced
the pricing and sales of branded drugs,
and the aftermath of hospital mergers
that were not challenged are ongoing.



abandonment of the anticompetitive
transaction), our ability to do so depends
in large measure on opposing counsel’s
recognition and appreciation of our
preparedness to achieve the needed
result thorough litigation, if necessary.

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


In addition, when resolving
anticompetitive mergers and practices
through settlement, we are placing
increasing emphasis on crafting remedies
that will successfully eliminate the
anticompetitive effects of the activity in
question, and do so in a timely fashion.

To stop suspect mergers and
practices through law enforcement, our
preferred strategy – that is, the most
effective and cost-efficient strategy – is to
prevent such mergers before they occur.
We implement this strategy primarily
through our authority to seek injunctive
relief under Section 13(b) of the Federal
Trade Commission Act. Often we are
able to resolve the competitive problem
through consent proceedings without
having to seek such an injunction.
Where injunctive relief is inappropriate
or unavailable, we may rely on our
administrative remedial powers to seek
to restore competition lost as a result of
a merger that could not be prevented.
Whether achieved by consent or in an
administrative proceeding, the principal
remedy is divestiture of assets sufficient
to preserve or restore competition,
although we have also employed conduct
remedies where appropriate.

We employ our law enforcement
authority to stop anticompetitive mergers
and practices both directly and
indirectly. Through direct legal
challenges to specific anticompetitive
transactions, we save consumers
millions of dollars annually by preventing
such transactions from taking place or
by arranging for restructuring of the
transaction to eliminate the
anticompetitive effects.
In addition, such challenges
indirectly serve our objective by serving
as legal precedent and demonstrating to
the business and legal communities that
the agency can and will successfully take
legal action to block anticompetitive
transactions. This deterrent effect
prevents many anticompetitive mergers
and acquisitions from even being

To accomplish this objective, we
emphasize (1) thorough investigation, as
well as sophisticated legal and economic
analysis to ensure we reach an accurate
assessment of the illegality of the activity
in question, and (2) comprehensive
preparation for litigation before an
Administrative Law Judge or in federal
court. While we frequently resolve
matters through settlement (or, in the
case of mergers, through the parties’

Another part of our strategy is to
study the remedies used in antitrust
cases, particularly divestiture orders
used to resolve merger cases. Our study
focuses in particular on what makes
divestiture orders more or less effective,

and on how to expedite the completion of
curative divestitures.

antitrust violations.

We established as another goal direct
dollar savings to consumers of at least
$200 million as a result of our prevention
of anticompetitive mergers that would
have raised prices by that amount. In
calculating these savings,
we take into consideration
the size of the markets
Performance Measure 2.2.1
Positive outcome of cases brought by
involved, the percentage
FTC due to alleged violations.
increase in price that would
likely have resulted from the
FY 1999 Target:
FY 1999 Actual:
merger, and the likely
Met or Exceeded:
duration of the price
Performance Measure 2.2.2
increase.1 The importance
Dollar savings for consumers
and relevance of this
resulting from FTC actions.
measure is self-evident. We
FY 1999 Target:
$200 million
exceeded our goal by a wide
FY 1999 Actual:
$1.2 billion
margin in 1999, preventing
Met or Exceeded:
mergers that would have
Performance Measure 2.2.3
cost consumers $1.2 billion
Average time, in months, from
had they been allowed to
proposed consent orders to

We are continuing to refine and
improve our skills in litigation, economic
analysis, and negotiation through
ongoing training for staff.
Finally, we try to ensure
that administrative litigation
and adjudication reach a
timely resolution.

Measures and

We measure our success
in stopping anticompetitive
mergers and practices
through law enforcement by
the percentage of successful
outcomes in enforcement
actions. This measure is
FY 1999 Target:
FY 1999 Actual:
important not only because
Met or Exceeded:
it directly reflects whether
we stopped, or failed to stop,
the anticompetitive mergers
and practices we challenged, but also
whether we are effectively utilizing the
limited resources available to the agency.
We established as a goal a positive
outcome in 80% of the enforcement
actions brought by the agency to
challenge anticompetitive mergers or
practices. We were able to meet this goal
in 1999, reaching a successful
settlement agreement or persuading
parties not to proceed with an
anticompetitive acquisition in more than
80% of the matters we challenged. The
Commission authorized 23 proposed
consent orders in 1999. In addition,
parties to proposed mergers abandoned
their transactions in ten instances
following our investigation, and two
transactions were reconstructed after
our investigations to avoid possible

9 months
4 months

We also established as a
goal a reduction of the
average time needed to
complete divestitures
required by consent orders, to nine
months from approval of a proposed
consent order to completion of the


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 definitive information, we
conservatively estimate that an anticompetitive
merger would lead to a price increase of at least
one percent absent enforcement action, lasting
for two years. The methodology used is
explained in 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.

divestiture. This measure is important
because delay in the divestiture of assets
that are the subject of a consent decree
often results in a decline in the
competitive viability of the assets. To
avoid delay, we increasingly seek either
“up-front” purchase and sales
agreements or divestiture orders that
limit the time in which divestiture relief
is accomplished to the minimum
necessary. As a result, we substantially
exceeded our goal, reducing the average
time needed to complete divestitures in
1999 to four months, down from an
average of 15 months in 1996.

may do so because it pursues only the
cases that are easiest to win.
Enforcement authorities such as the FTC
should not shy away from difficult cases,
which are not uncommon in antitrust
law. The FTC will continue to bring law
enforcement actions where it has reason
to believe that the merger or practice in
question is illegal and harms consumers,
even where litigation risks may exist.

We exceeded our performance goal of
$200 million in consumer savings
through the prevention of anticompetitive
mergers by a factor of six, achieving
savings of an estimated $1.2 billion in
In addition, in 1999 we released “A
1999. Because the amount of consumer
Study of the Commission’s Divestiture
savings achieved in any one year is
Process,” a staff report evaluating the
largely dependent on the size and nature
results of a study of divestiture orders
of transactions proposed, the amount of
entered between 1990 and 1994. The
savings in 1999 may not be typical (due
report discusses a number of factors that
to the large supermarket and wholesale
result in divestiture being more or less
gasoline mergers the we reviewed).
successful, which will assist the agency
However, based on our first year of
in crafting more effective divestiture
measuring consumer savings for GPRA,
consent orders in the future.
we expect the amount of consumer
savings resulting from
Dollar Value of Merger Transactions the FTC’s
antitrust enforcement
Dollar Value (in trillions)
activity to remain high.
Therefore, we believe it is
and Future
appropriate to raise our
goal to $500 million in
In 1999, we achieved
$0.17 $0.17 $0.22
a positive outcome in
We also
more than 80% of the
substantially exceeded
cases brought by the
1991 1992 1993 1994 1995 1996 1997 1998 1999
our performance goal by
agency, and we expect to
continue to do so in the future.
divestitures within an
average of four months,
In addition, based upon advice from
compared to the goal of nine months.
our Inspector General, we are developing
Based on our increased knowledge of the
a more representative means for
importance of accomplishing divestitures
evaluating this performance measure in
quickly and policy changes aimed at
2000. We realistically do not expect to
achieving that result, we expect that the
succeed in every case. A law
average time required to complete
enforcement agency that prevails in each
divestitures will continue to be
and every litigated matter, for example,
substantially less than nine months.





In addition to its law enforcement
activity, the FTC seeks to enhance
understanding of the operation of the
marketplace by educating the business
community about the antitrust laws.

Performance Measures
and Results

Our success in educating the
business community about the antitrust
laws is also determined in part by the
We pursue this objective through
timeliness with which we provided
guidance to the business
needed advice. Accordingly,
community; outreach
one measure in accomplishing
Performance Measure 2.3.1
efforts to Federal, state
this objective is the length of
Identify and survey FTC “customers”
and local agencies,
in the marketplace.
time required to provide
business groups and
advisory opinions related to
FY 1999 Target:
design survey
consumers; development
FY 1999 Actual:
design survey
issues in the health care
and publication of
Met or Exceeded:
industry. We set a goal of
antitrust guidelines and
providing such advisory
Performance Measure 2.3.2
policy statements; and
Average number of days to issue
opinions within 90 days of our
speeches and
advisory opinions in health care area.
receipt of a request, and we
publications. Through
exceeded that goal by
FY 1999 Target:
90 days
these mechanisms, we
FY 1999 Actual:
63 days
providing advisory opinions in
Met or Exceeded:
publicize the antitrust law
an average of 63 days.
and our enforcement
intentions, with the likely
result of deterring future
anticompetitive behavior.
Assessment and Future



Our enforcement program is made
more effective by public awareness of
what factors are likely to be challenged
as law violations. Through public
releases of Commission decisions in
various media such as press releases,
Web page publications, and speeches,
the public facts underlying Commission
actions provide bases for companies to
evaluate the likelihood that other
transactions would likely face challenge.

We were able to meet one
performance goal – designing a customer
survey – and to exceed the other
performance goal – providing advisory
opinions relating to health care within 90
days of receipt of a request. Upon further
consideration of the use of a general
survey, we are exploring whether our
education efforts would be better
evaluated by measuring the number of
contacts we have with our primary

As a complement to our enforcement
activity, we also advise other state and
federal government officials about the
possible effect that various regulatory
proposals may have on competition in
the relevant marketplace.

In addition to achieving these specific
performance goals, we worked to
accomplish this objective in a number of

other ways, including the following:

with foreign competition authorities.



With the Department of Justice
Antitrust Division, we issued draft
“Antitrust Guidelines for
Collaborations Among Competitors.”

We strongly believe in the importance of
these “outreach” activities and will
continue to place emphasis in this area
in future years.

We assisted understanding of and
compliance with the HSR Act through
written guidance, such as Premerger
Rules, formal interpretations, the
Premerger Notification Source Book,
and three Premerger Guides.


We now post on the FTC’s website
HSR-related information, including a
list of early terminations.


The FTC and the Department of
Justice promoted federal and state
cooperation by issuance of a joint
protocol for our coordinated


We routinely communicated with the
public through press releases
describing specific events.


Finally, because the Commission and
its staff have a great deal of expertise
about competition and about the
competitive effect of proposed laws, rules
or regulations of other governmental
bodies, they are often invited to comment
on such proposals. For instance, we
provided advice to state utility
commissions and to the Federal Energy
Regulatory Commission about alternative
ways they could structure the rules that
will guide the deregulation of electricity
transmission and generation to allow
competition in wholesale and retail sales
of electric power. Other recent examples
of competition advocacy comments
include those filed before the North
Carolina Legislature regarding
restrictions on distribution choices of
motor vehicle manufacturers, and
comments to the Illinois and North
Carolina legislatures regarding the
competitive effects of mandating
exclusive distributorships for alcoholic

Our Premerger Staff handled nearly
41,000 telephone inquires from the


The Bureau of Economics circulated
economic papers on competition

We maintained effective international
outreach and coordination efforts


FY 1999 Performance Measures
FY 1999

FY 1999

Met or

Goal 1: Prevent fraud, deception, and unfair business practices in the marketplace.
Objective 1.1–Identify fraud, deception, and unfair practices that cause the greatest consumer injury:
Measure 1.1.1: Cumulative number of consumer
complaints and inquiries entered in database.




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.




Measure 1.2.2: Percentage of targeted industry brought
into compliance through law enforcement and self







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
Objective 2.1–Identify anticompetitive mergers and practices that cause the greatest consumer injury:
Measure 2.1.1: Average number of days for review of
HSR-reported transactions.




Measure 2.1.2: Number of nonmerger investigations
opened per year.

45 to 70



Objective 2.2–Stop anticompetitive mergers and practices through law enforcement:
Measure 2.2.1: Positive outcome of cases brought by FTC
due to alleged violations.
Measure 2.2.2: Dollar savings for consumers resulting
from FTC actions.
Measure 2.2.3: Average time, in months, from proposed
consent orders to divestitures.













Objective 2.3–Prevent consumer injury through education:
Measure 2.3.1: Identify and survey FTC "customers" in the


During 1999, we consolidated two Performance Measures into Performance Measure 1.2.2. These
Measures read as follows: “Increase compliance in areas targeted for law enforcement.” and “Increase
compliance in targeted self-regulated areas.” Targets for these Measures were 20% and 10%,

Goal 1: Prevent fraud, deception, and unfair business practices in the marketplace.
Measure 2.3.2: Average number of days to issue advisory
opinions in health care area.