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FTC Testifies Before Senate Judiciary Subcommittee on Enforcement of the Antitrust Laws to Promote Competition and Protect Consumers

In testimony today before a U.S. Senate Judiciary subcommittee the Federal Trade Commission detailed its work on behalf of consumers in protecting competition in three key sectors of the economy – health care, technology, and energy.

Testifying on behalf of the FTC before the Subcommittee on Antitrust, Competition Policy, and Consumer Rights, Chairwoman Edith Ramirez said that competitive markets are the foundation of the U.S. economy and that effective antitrust enforcement is essential for those markets to function well. “Vigorous competition promotes economic growth and overall consumer welfare by keeping prices competitive, expanding output and the variety of choices available, and promoting innovation,” she said.

The rising cost of health care is a serious concern for most Americans, the testimony states, and accordingly, it is critical that the FTC act to preserve and promote competition in health care markets. This includes stopping anticompetitive health care mergers and combatting efforts to stifle competition for lower-cost generic pharmaceuticals through anticompetitive “pay-for-delay” agreements, the testimony states.

The testimony notes that recently the U.S. Supreme Court unanimously ruled in favor of the Commission, reviving its challenge to a hospital merger in Albany, Georgia, that resulted in an alleged monopoly for inpatient services. The case will now be heard in an administrative trial scheduled to begin this summer. In a second agency case before the Supreme Court, FTC v. Actavis, Inc., the FTC is appealing a circuit court ruling on pay-for-delay patent settlements related to the testosterone replacement drug AndroGel. “We are hopeful for a favorable decision from the Supreme Court that stops these anticompetitive settlements,” the testimony states.

Discussing the Commission’s antitrust oversight of the nation’s technology markets, the testimony highlights the agency’s balanced and fact-based approach. Sometimes, this leads the Commission to conclude that a proposed merger is likely to harm competition; at other times, the evidence supports a more cautious approach.

Working to preserve competition in the nation’s energy markets, the FTC uses all of the tools at its disposal, including monitoring industry activities, investigating possible antitrust violations, prosecuting cases, and conducting studies.

The testimony concludes with an overview of the FTC’s cooperation with other antitrust enforcers, including the Department of Justice’s Antitrust Division and counterparts worldwide, to ensure that competition laws function coherently and effectively.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

(FTC File No. P859910)

FTC Approves Final Order Settling Charges Against Software and Rent-to-Own Companies Accused of Computer Spying

Following a public comment period, the Federal Trade Commission has approved nine final orders settling charges that seven rent-to-own companies and a software design firm and its two principals spied on consumers using computers that consumers rented from them. The companies used software to take screenshots of confidential and personal information, log customers’ computer keystrokes, and in some cases take webcam pictures of people in their own homes, all without the customers’ knowledge.

In settling the FTC’s administrative complaint, the respondents will be prohibited from using monitoring software and banned from using deceptive methods to gather information from consumers. The settlements will prohibit the use of geophysical location tracking without consumer consent and notice, and bar the use of fake software registration screens to collect personal information from consumers. The seven rent-to-own stores will also be prohibited from using information improperly gathered from consumers to collect on accounts. In addition, the software company, DesignerWare, and its principals, Ronald P. Koller and Timothy Kelly, will be barred from providing others with the means to commit illegal acts. All of the proposed settlements contain record-keeping requirements to enable the FTC to monitor compliance with the orders for 20 years.

The respondents, with links to the respective orders and associated public comments, are:

The Commission vote approving the final orders and letters to members of the public who commented on it was 3-0-1, with Commissioner Wright not participating. (FTC File No. 112-3151; the staff contacts are Julie Mayer, 206-220-4475, and Tracy Thorleifson, 206-220-4181.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Chairwoman Releases 2012-2013 Annual Highlights

Federal Trade Commission Chairwoman Edith Ramirez released the agency’s 2012-2013 Annual Highlights today at the Spring Meeting of the American Bar Association’s Section of Antitrust Law in Washington, D.C., recognizing the FTC’s continued efforts to protect consumers and promote competition.

The Highlights summarize Commission initiatives in multiple areas since April 2012, including promoting online privacy and data security, fostering competition in high-tech industries and healthcare, and safeguarding children and other vulnerable consumers.

Statistics and data for the Federal Trade Commission’s activities in 2012

Stats & Data 2012
(click image to view full-size)

“As we head into our second century, the FTC is dedicated to advancing consumer interests while encouraging innovation and competition in our dynamic economy,” Ramirez said.

The Highlights call attention to the FTC’s work across 11 broad categories, which include:

Protecting Consumer Privacy: The FTC continues to raise the profile of privacy practices – online and off – through law enforcement, consumer education, and policy initiatives.
Containing Health Care & Drug Costs: The FTC works to prevent anticompetitive mergers and conduct that might diminish competition in healthcare markets. Restricting anticompetitive “pay-for-delay” drug patent settlements continues to be an FTC priority.
Fostering Competition & Innovation: The FTC examines difficult issues at the intersection of antitrust and intellectual property law – issues related to innovation, standard-setting, and patents.
Challenging Deceptive Advertising and Marketing: The FTC works to ensure that national advertisers can back up the claims they make for their products, especially health and safety claims.
Safeguarding Children: The FTC enforces the Children’s Online Privacy Protection Rule, ensuring parents have the tools they need to protect their children’s privacy.

The Highlights identify initiatives the agency takes in advancing competitive principles and guarding consumers’ pocketbooks. As consumers continue to face financial challenges in a recovering economy, the FTC takes action to ensure that they are protected from abusive debt collection practices and fraudulent mortgage advertising.

The FTC also focuses on law enforcement and education efforts on topics trending in technology, such as monitoring consumer protection issues that may arise from the growing use of mobile devices. In addition, the agency made use of the Challenge.gov crowdsourcing platform, hosting the FTC Robocall Challenge to come up with new, innovative ways to block illegal prerecorded calls.

In monitoring environmental claims and energy markets, the agency closely scrutinizes mergers and acquisitions in the energy sector, and monitors environmental marketing to make sure it is truthful and based on scientific evidence. The Highlights also note the FTC’s efforts to collaborate with international partners.

Archives of past Annual Highlights and Reports are available on the FTC website.

FTC Files Amended Complaint, Renewed Motions Seeking to Stop Integration of Phoebe Putney Health System and Former Palmyra Park Hospital in Albany, Ga.

The Federal Trade Commission this week filed renewed motions in its ongoing litigation related to Phoebe Putney Health System’s now consummated acquisition of Palmyra Park Hospital in Albany, Georgia. In filing the motions in federal district court, the FTC is seeking a temporary restraining order and preliminary injunction to stop the further integration of the two hospitals and to ensure that Palmyra’s assets are maintained until an administrative trial on the merits of the acquisition, which is scheduled to begin on August 5, 2013.

Case Background

On April 20, 2011, the FTC filed an action in federal district court seeking to block the then-proposed combination of the only two hospitals in Albany, Ga. — Phoebe Putney Health System, Inc. and Palmyra Park Hospital. The FTC alleged the deal – a merger to monopoly — would reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, harming patients and local employers and employees.

On June 27, 2011, the U.S. District Court for the Middle District of Georgia, Albany Division, dismissed the FTC’s complaint and denied its motion for a preliminary injunction. The court found that the transaction was shielded from antitrust scrutiny by the state action doctrine. The FTC appealed the district court’s decision to the U.S. Court of Appeals for the Eleventh Circuit, which affirmed the district court’s ruling on December 9, 2011.

The FTC appealed the Eleventh Circuit’s ruling to the U.S. Supreme Court, and on February 19, 2013, the Supreme Court ruled unanimously that the state action doctrine did not immunize the hospital acquisition from the federal antitrust laws.

FTC/DOJ ACO Working Group Issues Summary of Activities Since October 2011 Release of ACO Antitrust Enforcement Policy

The Federal Trade Commission and Department of Justice have issued a joint summary of the activities of the Accountable Care Organization (ACO) Working Group between October 2011 and March 31, 2013. The FTC and DOJ established the Working Group to collaborate and discuss issues concerning ACOs created under the Affordable Care Act of 2010. The Act encourages physicians, hospitals, and other health care providers to integrate their health care delivery systems in order to improve the quality and reduce the costs of health care services.

The summary, which follows issuance of the agencies’ October 2011 antitrust enforcement policy statement regarding ACOs participating in the Medicare Shared Savings Program, reports that during the time period covered, the ACO Working Group fielded 33 questions related principally to primary service area (PSA) share calculations, and two requests for voluntary expedited review from proposed ACOs.

Under the policy statement, an ACO may calculate its PSA shares to determine whether the ACO falls within an antitrust safety zone for certain ACOs that are highly likely to raise significant competitive concerns. The ACO Working Group responded to most of the 33 PSA share questions within five business days, and in connection with the release of this summary is now making the questions and answers publicly available on their websites. The largest category of questions concerned obtaining and using Medicare and other data to calculate PSA shares.

Also under the policy statement, a newly formed ACO may request voluntary expedited antitrust review of its program. Both of the ACOs that sought such review during the time period covered by the summary withdrew their requests. (The staff contact is Saralisa Brau, Bureau of Competition, 202-326-2774)

FTC Video Helps Funeral Providers Comply with the Funeral Rule

The Federal Trade Commission has released a new video to help businesses that sell funeral goods and services comply with the Funeral Rule.

The Rule applies to licensed funeral directors and funeral homes, as well as to cemeteries, crematories, and other businesses that sell both funeral goods and services. It does not apply to third-party sellers, like casket or monument dealers, or cemeteries that do not have a funeral home on-site. The Funeral Rule establishes some basic requirements that help to ensure that people have the information they need to compare prices and buy only the funeral services and goods they want.

If your business is covered by the Funeral Rule, watch the video to learn about the major provisions of the Rule and how you can comply. For more information visit the FTC’s funeral industry web page.

FTC and New York and Florida Attorneys General Amend Complaint Against The Tax Club, Charged with Bilking Consumers Trying to Launch Home-Based Businesses

The Federal Trade Commission has amended a complaint against The Tax Club defendants, who in January 2013 were charged by the FTC and the New York and Florida Attorneys General with deceiving consumers who believed the defendants’ services would help their home-based businesses succeed. A federal court subsequently issued a stipulated preliminary injunction order that requires the defendants to stop the deceptive practices alleged in the complaint during the pendency of the litigation.

The amended complaint bolsters the agencies’ allegations that the corporate defendants operated as a common enterprise, and that the individual defendants are liable for corporate conduct.

The Commission vote authorizing staff to file the amended complaint was 4-0. It was filed in the U.S. District Court for the Southern District of New York on April 8, 2013.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

Bosley, Inc. Settles FTC Charges That It Illegally Exchanged Competitively Sensitive Business Information With Rival Firm, Hair Club, Inc.

Bosley, Inc., the nation’s largest manager of medical/surgical hair restoration procedures, has settled Federal Trade Commission charges that it illegally exchanged competitively sensitive, nonpublic information about its business practices with one of its competitors, HC (USA), Inc., commonly known as Hair Club. In settling the FTC’s charges, Bosley has agreed not to communicate such information in the future, and will institute an antitrust compliance program.

Bosley, headquartered in Beverly Hills, Calif., is a wholly owned subsidiary of Aderans America Holdings, Inc. Aderans America, also located in Beverly Hills, is a wholly owned subsidiary of Aderans Co., Ltd, headquartered in Tokyo, Japan. Bosley manages medical/surgical hair restoration practices and provides hair therapy products.

Hair Club, headquartered in Boca Raton, Fla., is a wholly owned subsidiary of Regis Corporation, which is based in Minneapolis, Minnesota. Hair Club provides hair-loss treatments, including non-surgical hair restoration and hair therapy products. Hair Club also manages medical/surgical hair restoration practices. Under a stock purchase agreement dated July 13, 2012, Aderans intends to acquire Hair Club for $163.5 million.

The FTC alleges that for at least the past four years, Bosley has exchanged competitively sensitive, nonpublic information about its business operations with Hair Club. The information exchanged by the companies’ CEOs included details about future product offerings, surgical hair transplantation price floors and discounts, plans for business expansion and contraction, and current business operations and performance.

The FTC charges that by directly and repeatedly exchanging competitively sensitive, nonpublic information, the companies have violated Section 5 of the Federal Trade Commission Act, which prohibits unfair methods of competition. According to the FTC’s complaint, the exchange of such information could facilitate coordination between Bosley and Hair Club by reducing uncertainty regarding each other’s product offerings, prices, and strategic plans.

In addition, the FTC alleges that Hair Club was not the only firm to which Bosley provided such information. Bosley’s exchange of sensitive information to other rivals increases the potential for competitive harm.

The proposed order settling the FTC’s charges remedies the anticompetitive conduct alleged in the complaint. The proposed order bars Bosley from communicating competitively sensitive, nonpublic information directly to any hair transplantation competitor. It also bars Bosley from requesting, encouraging, or facilitating the communication of any such information from any of its competitors.

In addition, the proposed order requires Bosley to institute a program to ensure that it complies with federal antitrust laws in the future. This program includes: 1) developing annual compliance training for all Bosley officers, executives, and employees who have contact with competitors or have sales, marketing, or pricing responsibilities for Bosley’s hair transplantation operations; 2) providing legal support to respond to questions regarding compliance with federal antitrust laws; and 3) retaining documents needed to ensure compliance with the FTC’s order.

Finally, the proposed order requires Bosley to submit periodic compliance reports to the FTC, to provide the FTC with 30 days’ notice before any corporate changes that may affect compliance with the order, and to provide the FTC access to its U.S. facilities, records, and employees with five days’ notice.

The proposed order does not interfere with Bosley’s ability to compete or to participate in legitimate business activities, including trade associations and medical societies. The proposed order specifically exempts from its provisions certain types of legitimate information exchanges.

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 3-0-1, with Commissioner Joshua D. Wright recused. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 8, 2013, after which the Commission will decide whether to make the proposed consent order final.

Interested parties can submit comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments can be submitted electronically. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the respondent has actually violated the law. A consent order is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

Federal Trade Commission Posts New Video to Help Identity Theft Victims

If you’re a victim of identity theft or know someone who is, the Federal Trade Commission has a new video designed to help facilitators who assist consumers in repairing their identity. Helping Victims of Identity Theft is the latest addition to the FTC’s library of resources that explain not only how to recognize identity theft, but also how to report it and repair the damage it can cause. The FTC gets more complaints about identity theft each year than any other consumer issue, and estimates that nine million consumers become identity theft victims each year.

The video promotes the Guide for Assisting Identity Theft Victims, a tool for advocates, social workers, attorneys, and others who work to help resolve the issues identity theft causes. The Guide is a complement to the do-it-yourself instructions in Taking Charge: What To Do if Your Identity is Stolen.

The agency distributed more than two million publications just about identity theft in 2012 alone. Check out the video, and fight back against identity theft.

FTC Sends Refunds to Consumers Harmed by Foreclosure Relief Scheme

The Federal Trade Commission mailed 341 refund checks to Spanish-speaking consumers who lost money to scammers who promised to stop foreclosure or obtain mortgage loan modifications. Under a summary judgment order, the Dinamica Financiera defendants were banned from selling mortgage loan modification or foreclosure relief services.

More than $107,000 is being returned to consumers. The amount each consumer will receive will vary; the check represents 12 percent of each consumer’s estimated loss. Those who receive the checks from the FTC’s refund administrator should cash them within 60 days of the mailing date. The FTC never requires consumers to pay money or provide information before refund checks can be cashed. Those with questions should call the refund administrator, Gilardi & Co., LLC, at 1-877-281-5622, or visit www.FTC.gov/refunds for more general information.

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