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Mortgage Foreclosure “Rescue” Operators Settle with FTC

A mortgage foreclosure rescue service that claimed that, for a $1,200 fee, they would stop foreclosure and save consumers’ homes, has agreed to settle Federal Trade Commission charges that it violated federal law. Many consumers who paid the company ultimately lost their homes to foreclosure, and others avoided foreclosure only through their own efforts.

Under a federal court settlement, the defendants are barred from falsely representing:

that any home mortgage foreclosure can or will be stopped, postponed, or prevented;
an ability to help all consumers, regardless of their individual circumstances;
the likelihood that foreclosure can or will be stopped, postponed, or prevented;
the degree of past success of any such efforts;
the number of satisfied customers or customer complaints;
the terms of any refund or guarantee;
the likelihood that a consumer will receive a full or partial refund if a foreclosure is not stopped, postponed, or prevented;
any approval, endorsement, or rating by the Better Business Bureau or any other consumer advocacy or consumer protection association; or
any fact material to a consumer’s decision to purchase any mortgage foreclosure rescue service.

The defendants also are prohibited from falsely representing any material fact in connection with marketing any good or service. In addition, they are barred from disclosing or benefitting from personal information obtained from anyone in connection with marketing mortgage foreclosure rescue services. The settlement imposes a judgment of $1,178,920, all but $8,320.84 of which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlement also contains record-keeping provisions to allow the FTC to monitor compliance with the order.

The Commission vote to authorize staff to file the stipulated final order regarding Florida-based Mortgage Foreclosure Solutions, Inc., Debra Behrens, and Michael Siani, was 4-0. The order was filed in the U.S. District Court for the Middle District of Florida, Tampa Division, and was entered by the court on January 5, 2009.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

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 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. X080026)
(MFS)

Mortgage Foreclosure “Rescue” Operators Settle with FTC

Under a federal court settlement, the defendants are barred from falsely representing:

that any home mortgage foreclosure can or will be stopped, postponed, or prevented;
an ability to help all consumers, regardless of their individual circumstances;
the likelihood that foreclosure can or will be stopped, postponed, or prevented;
the degree of past success of any such efforts;
the number of satisfied customers or customer complaints;
the terms of any refund or guarantee;
the likelihood that a consumer will receive a full or partial refund if a foreclosure is not stopped, postponed, or prevented;
any approval, endorsement, or rating by the Better Business Bureau or any other consumer advocacy or consumer protection association; or
any fact material to a consumer’s decision to purchase any mortgage foreclosure rescue service.

(FTC File No. X080026)
(MFS)

Commission Announces Revised Jurisdictional Thresholds for Section 7A and Section 8 of the Clayton Act

The Commission, by a vote of 4-0, has approved a Federal Register notice announcing the revised thresholds for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 required by the 2000 amendments to Section 7A of the Clayton Act. Section 7A(a)(2) requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). Certain related thresholds and limitations in the HSR rules also are adjusted by this notice. The notice will be published in the Federal Register shortly and become effective 30 days after publication. The revised thresholds will apply to all transactions that close on or after the effective date of this notice. (FTC File No. P859910; the staff contact is Michael Verne, Bureau of Competition, 202-326-3100.)

Also, by a vote of 4-0, the Commission has approved a Federal Register notice announcing the revised thresholds for Section 8 interlocking directorates. Section 8 of the Clayton Act was amended on November 16, 1990. The amendment establishes jurisdictional thresholds that trigger the Act’s prohibition on interlocking directorates. The Act also requires that the Commission revise those thresholds annually, based on the change in the level of gross national product. The new thresholds are $26,161,000 for Section 8(a)(1) and $2,616,100 for Section 8(a)(2)(A). The notice announcing the revisions will be published in the Federal Register shortly and will be effective upon publication. (FTC File No. P859910; the staff contact is James F. Mongoven, Bureau of Competition, 202-326-2879.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 1.2009.wpd)

General Counsel William Blumenthal To Leave FTC

Federal Trade Commission Chairman William E. Kovacic announced today that William Blumenthal, the agency’s General Counsel for almost four years, will leave the agency to return to private law practice.

“Bill set the highest possible standards for public service and the practice of law,” Chairman Kovacic said. “Within the FTC, he was a brilliant counselor. His advice routinely displayed a singular mastery of both technical issues and broader policy considerations. Outside the agency, at home and abroad, Bill applied an enviable mix of knowledge and wisdom to especially difficult questions. In doing so, he was an ideal representative for the FTC. In the development of competition policy in numerous countries, most notably in China, the United States played an extraordinarily constructive role because Bill was a frequent participant in the U.S. delegation. In the years ahead, Bill’s thoughtful approach will provide an enduring, valuable model for FTC officials and for the larger community of competition law and consumer protection authorities.”

Blumenthal, who joined the Commission in February 2005, will join Clifford Chance US LLP as a partner in the firm’s mergers and acquisitions practice and chairman of its U.S. antitrust group.

As the Commission’s chief legal officer and adviser, the General Counsel represents the agency in court and provides legal counsel to the Commission and its bureaus and offices. Blumenthal oversaw the FTC’s role in developing and presenting the federal government’s position, typically as amicus briefs, in several matters before the U.S. Supreme Court, including cases concerning patent tying, predatory buying, price discrimination, resale price maintenance, and patent settlements involving reverse payments. He also oversaw more than two dozen appellate cases, including antitrust matters involving corporate mergers, horizontal conspiracy, and monopolization, and consumer protection matters involving unauthorized telephone billing, third-party debt collection, the Telemarketing Sales Rule, and the adverse action notice requirement for users of consumer reports.

Blumenthal also acted for the Commission in formulating the agency’s position in several intellectual property cases. In addition, he played a significant role in influencing international competition policy, including discussing a new anti-monopoly law with officials in China. He also discussed competition law with officials in India, Japan, and Korea, as well as competition and consumer protection matters with the European Commission.

Before joining the Commission as General Counsel, Blumenthal spent 10 years with King & Spalding LLP as a partner in the firm’s antitrust and trade regulation practice. He served as the International Officer of the American Bar Association’s Antitrust Section, and he was a member of the Competition Committee of the Organization for Economic Cooperation and Development’s Business and Industry Advisory Committee, the International Chamber of Commerce’s Commission on Competition, and the Antitrust Council of the U.S. Chamber of Commerce. Blumenthal also served as a U.S. Private Sector Advisor to the Notification and Procedures Subgroup of the Working Group on Mergers for the International Competition Network.

Blumenthal graduated from Harvard Law School and earned undergraduate and graduate degrees in Economics from Brown University.

(Blumenthal)

FTC Reports to Congress on Credit Report Complaint Referral Program

The Federal Trade Commission has issued a report to Congress on the credit report complaint referral program under the Fair Credit Reporting Act (FCRA).

The Commission is the federal agency with primary responsibility for compliance with the FCRA and operates a system for receiving complaints from consumers about possible violations of the FCRA. Section 611(e) of the FCRA, which was added by Congress in the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), requires the Commission to establish a program to refer certain consumer complaints to the three nationwide consumer reporting agencies (CRAs) – TransUnion, Equifax, and Experian – and to report to Congress on the information gathered in the program. The complaints covered by the program are those received by the Commission from consumers who have disputed the accuracy of information in their credit report with a CRA and are dissatisfied with the results of the process. This report covers the period from the initiation of the program in 2004 through the end of 2007.

The Commission vote to issue the report was 4-0.

(FCRA Complaint Referral – P044804)

FTC Intervenes in King Pharmaceuticals Acquisition of Rival Alpharma Inc.

The Federal Trade Commission has issued a consent order to settle its charges that King Pharmaceuticals, Inc.’s proposed $1.6 billion acquisition of rival drug-maker Alpharma Inc. would be anticompetitive and would violate federal law. The proposed consent order requires King to divest the rights to Alpharma’s branded oral long-acting opioid (LAO) analgesic drug Kadian to Actavis, restoring the competition between Kadian and King’s LAO Avinza that would be lost as a result of the acquisition. Actavis is well-positioned to acquire the Kadian assets, as it currently manufactures the drug for King at its plant in Elizabeth, New Jersey.

“Tens of millions of Americans suffer from chronic pain, and a significant number use King’s Avinza or Alpharma’s Kadian for treatment,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The Commission’s action announced today will ensure that consumers will continue to benefit from the important competition between these two drugs through lower prices.”

Oral LAOs have become the standard of care for managing moderate-to-severe chronic pain. Although these drugs include oral extended-release formulations of different chemical compounds such as morphine, oxycodone, and oxymorphone, these products, in addition to sharing a common mechanism of action, have similar indications, dosage forms, and dosage frequency. Other drugs such as short-acting opioids or non-oral opioids are not close therapeutic substitutes for the oral LAO products. King’s Avinza and Alpharma’s Kadian are the only competitively significant brands of morphine sulfate oral LAOs in the United States. The total annual sales of oral LAOs in 2007 was approximately $4 billion.

According to the Commission’s complaint, King’s acquisition of Alpharma as proposed would be anticompetitive and would violate federal law. The FTC contends that the deal would reduce the close and substantial competition between King and Alpharma in the relevant market, which is already highly concentrated. Purdue Pharma L.P.’s OxyContin, a branded oxycodone-based LAO, is the dominant product in the oral LAO market in the United States. While much smaller players than OxyContin, King’s Avinza and Alpharma’s Kadian both are significant branded competitors. As the only two branded morphine sulfate products, Kadian and Avinza are considered to be particularly close substitutes by many customers.

The complaint states that entry into the market for the manufacture and sale of oral LAOs is difficult, expensive, and time consuming and would not offset the anticompetitive impact of the acquisition as proposed. Developing and obtaining U.S. Food and Drug Administration (FDA) approval to make and sell oral LAOs takes at least two years, according to the complaint, due to significant regulatory, technological, and intellectual barriers.

The FTC’s order is designed to remedy the anticompetitive impact of the proposed transaction. It requires King to divest Kadian to Actavis no later than 10 days after it completes its acquisition of Alpharma. With the divestiture, Actavis, one of the world’s largest generic drug companies, will continue to sell Kadian in competition with Avinza and other oral LAOs, and will be able to introduce an “authorized” generic version of Kadian earlier than it would have been able to otherwise, as the patent on Kadian does not expire until 2010. As the current manufacturer of Kadian, Actavis has the incentive and ability to launch the first generic Kadian product before the patent expires. Because Actavis is already the maker of Kadian, the order does not require the divestiture of any fixed assets, does not contain an interim supply agreement, and does not require King to provide any technical assistance to the acquirer. The order does, however, restrict King’s use of confidential business information related to Kadian.

If the FTC later determines that Actavis is not an acceptable acquirer of the Kadian assets, the order requires that the parties unwind the divestiture and then divest Kadian to another Commission-approved buyer within six months of when the order becomes final. The FTC may appoint a divestiture trustee to oversee the sale of the assets if necessary and may appoint an interim monitor to ensure the companies’ compliance with the terms of the order.

The Commission vote to accept the complaint and consent order and place copies on the public record was 3-0, with Commissioner Pamela Jones Harbour recused. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The complaint, consent order, and an analysis to aid public comment can be found now on the Commission’s Web site at http://www.ftc.gov/os/caselist/0810240/index.shtm.

The agreement will be subject to public comment for 30 days, beginning today and continuing through January 27, 2009, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 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: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. 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 $11,000.

Copies of the documents related to this matter are available from the FTC’s web site at http://www.ftc.gov and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. 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 [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 081-0240)
(Alpharma.final.wpd)

FTC Intervenes in King Pharmaceuticals Acquisition of Rival Alpharma Inc.

(FTC File No. 081-0240)
(Alpharma.final.wpd)

FTC Settles Price-Fixing Charges Against Two Separate Doctors’ Groups

Physician groups in Modesto, California, and in Boulder County, Colorado, have agreed to settle separate Federal Trade Commission charges that they each violated federal laws. Both groups are charged with orchestrating and carrying out agreements among their members to refuse, and threaten to refuse, to deal with insurance providers, unless they raised the fees paid to the groups’ doctors. The proposed consent orders settling the FTC’s complaints bar each group from engaging in similar conduct in the future.

“When health care providers decide to pursue personal gain through unlawful price-fixing, consumers often are forced to either pay higher prices or forgo vital treatments they can no longer afford,” said David P. Wales, Acting Director of the Bureau of Competition. “The actions announced today against two separate physician groups should send a strong message that we will not let this conduct stand.”

Independent Practice Associates Medical Group, Inc., doing business as AllCare IPA (AllCare) is a multi-specialty IPA with approximately 500 physicians in the Modesto, California, area. Since its formation, AllCare and its physicians have contracted with Preferred Provider Organizations (PPOs) to provide fee-for service care. In PPO arrangements, the payer compensates the physicians for services provided under agreed-upon fee schedules. Such arrangements may or may not entail financial risk-sharing or clinical integration. According to the FTC, between 2005 and 2006, AllCare acted to restrain competition on fee-for-service contracts by facilitating, entering into, and implementing agreements to fix the prices and other contract terms with PPO payers; to engage in collective negotiations over the terms and conditions of dealing with such payers; and to have members refrain from negotiating with such payers on terms other than those approved by the group.

Boulder Valley Independent Practice Association (BVIPA) is a multi-specialty IPA with approximately 365 physicians in the Boulder County, Colorado, area. According to the Commission’s complaint, between 2001 and 2006, BVIPA, which is governed by a board of directors acting on behalf of its members, negotiated and signed agreements with approximately 17 payers and conducted periodic renegotiations of its contracts with large payers to increase rates. During this time, BVIPA threatened payers facing rate increases with contract termination if they refused to negotiate with the group or to otherwise respond to BVIPA’s demands. In addition, BVIPA actively discouraged members from contracting directly with payers; some payers that tried to contract with some of the group’s members were required to go through BVIPA. Finally, although BVIPA claimed to offer payers the choice of contracting methods, in reality it did not do so, and continued to negotiate with payers on behalf of its members. The complaint states that BVIPA’s conduct unreasonably restrained and hindered competition by unreasonably restraining price and other forms of competition among health care providers.

According to the FTC’s complaints, AllCare’s and BVIPA’s separate conduct in setting fees for payers and refusing to deal with payers constitutes illegal price-fixing, and violates federal law. In addition, the FTC contends that neither group engaged in any activity that might justify collective agreements on the prices its members would accept for their services. The groups’ physicians did not share financial risk in providing medical services, did not collaborate in any program to monitor and modify clinical practice patterns or otherwise integrate the delivery of their services. Through their actions, the complaints state, AllCare and BVIPA restrained prices and other forms of competition in Modesto and Boulder County, and harmed consumers by increasing prices for physician services.

The Commission’s proposed consent orders are designed to eliminate the illegal anticompetitive conduct alleged in the complaints. They would prohibit AllCare and BVIPA from entering into or facilitating agreements between or among physicians: 1) to negotiate on behalf of any physician with any payer; 2) to refuse to deal, or threaten to refuse to deal, with any payer; 3) to designate the terms, conditions, or requirements upon which any physician deals, or is willing to deal, with any payer, including, but not limited to price terms; 4) not to deal individually with any payer, or not to deal with any payer through any arrangement other than one involving AllCare or BVIPA, respectively.

Other parts of the orders reinforce these general prohibitions. The order prohibits AllCare and BVIPA from exchanging information among physicians concerning whether, or on what terms, to contract with a payer and from encouraging, suggesting, advising, pressuring, inducing, or attempting to induce anyone into any actions otherwise prohibited by the order.

As in other Commission orders addressing providers’ collective bargaining with payers, the AllCare and BVIPA orders exclude certain types of agreements from their provisions. For example, the orders allow the physicians to engage in conduct (including collectively determining reimbursement and other terms of contracts) deemed reasonably necessary to operate any “qualified risk-sharing joint arrangement” or “qualified clinically-integrated joint
arrangement.” As defined, the former term must satisfy two conditions: 1) all physician participants must share substantial financial risk through the arrangement; and 2) any agreement on fees or terms of reimbursement must be reasonably necessary to obtain significant efficiencies through the joint arrangement.

In a qualified clinically integrated joint arrangement, the physicians undertake cooperative activities to achieve efficiencies in the delivery of clinical services, without necessarily sharing substantial financial risk. Participating physicians must establish a high degree of interdependence and cooperation through their use of programs to evaluate and modify their clinical practice patterns. Any agreement on fees or terms of reimbursement must be reasonably necessary to obtain significant efficiencies through the joint arrangement.

Finally, the orders require that AllCare and BVIPA notify the FTC for specified time periods before contracting with health plans on behalf of physicians pursuant to either a qualified risk-sharing or qualified clinically-integrated joint arrangement, and that AllCare and BVIPA terminate certain contracts they entered into illegally. Both IPAs are required to distribute copies of the order to certain physicians and meet other reporting and monitoring terms. The orders will expire in 20 years.

The Commission vote to place the consent orders on the public record for comment and publish a copy in the Federal Register was 4-0. The Commission is accepting comments on the orders for 30 days, until January 22, 2008, after which it will decide whether to make them final. Comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

Copies of the consent orders are available now on the FTC’s Web site and as a link to this press release. 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 [email protected], or write to the Office ofPolicy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File Nos. 061-0258 and 051-0252)
(AllCare-Boulder IPA.final.wpd)

FTC Settles Price-Fixing Charges Against Two Separate Doctors’ Groups

(FTC File Nos. 061-0258 and 051-0252)
(AllCare-Boulder IPA.final.wpd)

FTC Issues Interim Final Rules Amending Parts 3 and 4 of its Rules of Practice; Rules are Designed to Expedite and Streamline the Entire Part 3 Proceeding

The Federal Trade Commission today approved a notice adopting interim final rules amending Parts 3 and 4 of the agency’s Rules of Practice, and requesting public comments within 30 days of the date they are published in the Federal Register.

Today’s action represents the next step in the FTC’s broad and systematic internal review of its adjudicative proceedings process. In October 2008, the FTC published a Notice of Proposed Rulemaking (NPRM) detailing proposed rule revisions and inviting public comment. The rules issued today represent a comprehensive and significant revision of the Commission’s adjudicatory process designed to expedite the prehearing, hearing, and appeal phases, streamline discovery and motion practice, and ensure that the Commission applies its substantive expertise, as appropriate, earlier in the process. The amended rules include, for the first time, deadlines for the Commission to resolve appeals of initial decisions by the Administrative Law Judges (ALJs). They will apply prospectively only, to new cases initiated after publication in the Federal Register.

The Commission’s Part 3 process has long been criticized as being too protracted. In merger cases, parties frequently argue that drawn out proceedings will result in their abandoning transactions before the antitrust merits can be adjudicated; and the protracted nature of Part 3 proceedings has contributed to the reluctance of some federal courts to grant preliminary injunctive relief in merger cases brought under Section 13(b) of the FTC Act. Moreover, protracted Part 3 proceedings do not necessarily result in decisions that are more just or fair, and instead may result in substantially increased litigation costs for the Commission and respondents whose transactions or practices are challenged. For example, protracted discovery schedules and pretrial proceedings can result in nonessential discovery and motion practice that can be very costly to the Commission, respondents, and third parties.

The goal of the current rulemaking is to address these concerns by making appropriate changes to streamline and otherwise improve the Part 3 process, while balancing three factors: 1) the public interest in a high-quality decision-making process; 2) the interests of justice in an expeditious review of litigated matters; and 3) the interest of the parties in litigating matters without unnecessary expense.

The Commission received eight comments on the proposed rule amendments after the NPRM was published in October. After considering these comments, the agency has modified several of the proposed rule changes outlined in the NPRM and has issued a rule setting strict deadlines on Commission review of initial decisions.

First, as detailed in the notice, the interim final rules impose deadlines designed to expedite the prehearing phase. The revised rules require the date of the evidentiary hearing be set in a notice accompanying issuance of the complaint. This hearing would be held five months from the date of the complaint in cases in which the Commission also seeks preliminary injunctive relief under Section 13(b) of the FTC Act, and eight months from this date in all other cases, unless the Commission decides that a different date would be appropriate. The rules also authorize the Commission to delay the hearing date for good cause after issuance of the complaint. Respondents will be required to file answers to the complaint within 14 days of service instead of the current 20, and the initial meet-and-confer session as well as the initial scheduling conference will be scheduled sooner in order to facilitate earlier commencement of discovery.

Other rule changes are designed to expedite and improve the discovery process and motion practice. For example, the rules limit the scope of the search for discoverable materials for complaint counsel, respondents, and third parties to minimize the burden of search costs, specify procedures governing the discovery of electronically stored information, and expressly limit waivers resulting from the inadvertent disclosure of privileged materials. The rules also require the ALJ to issue a standard protective order designed to limit delays and ensure that privileged or confidential information is treated consistently in all Part 3 cases. They also impose word-count limits on all motions, set deadlines to identify expert witnesses and to submit expert reports, and limit the number of expert witnesses.

The rules now provide that the Commission decides in the first instance all prehearing dispositive motions, including motions for summary decision (unless it refers the motion to the ALJ) within 45 days of the filing of the motion papers to ensure that the Commission apply its legal expertise earlier in the process. After considering commenters’ concerns about the role of the agency in resolving such motions in the first instance, the Commission continues to believe that the revised rule, which is concerned with motions that raise public policy or purely legal issues, does not improperly interfere with the independence of the ALJ.

The Commission also amended the rules to eliminate automatic withdrawals from adjudication or stays of the Part 3 proceedings when a party files a motion for withdrawal or to dismiss after the denial of a preliminary injunction in a related federal court action brought by the agency. At the same time, the FTC amended the rule to promote earlier consideration of whether to proceed with Part 3 adjudication and affirmed its adherence to its 1995 Policy Statement calling for a case-by-case analysis of whether Part 3 litigation should be pursued after a denial of a preliminary injunction. The notice also states that, after due consideration of commenters’ concerns, the Commission has decided not to adopt a proposed rule revision that would have made explicit the authority of the FTC or one of its members to preside over pre-hearing procedures before transferring the matter to an ALJ.

The amendments are also designed to expedite and improve the evidentiary hearing and post-hearing phases. For example, the length of hearings is limited to 210 hours (the equivalent of 30 seven-hour trial days) unless extended for good cause by the Commission; hearsay evidence – including prior testimony – is expressly permitted if deemed sufficiently reliable; witness testimony is to be video recorded and made part of the official record to permit the Commission on review to observe witness demeanor; and deadlines are imposed for the simultaneous filing of proposed findings, conclusions, and supporting briefs after the hearing. The rules also require that the ALJ must file the initial decision within 70 days of the filing of the last-filed proposed findings, conclusions and briefs.

The Commission stated that comments filed in response to the NPRM had not persuaded the agency that its default timing deadlines are unfair or that respondents in Part 3 proceedings would have inadequate time to pursue broad discovery or present its case at the hearing. The Commission also determined that the comments failed to give adequate weight to provisions authorizing the agency to grant extension for “good cause.” The Commission believes the Part 3 timing deadlines are consistent with the manner in which federal courts can manage and resolve complex antitrust cases.

In response to commenters’ concerns, the interim final rules impose deadlines on the Commission to review initial decisions and issue final decisions. For cases in which the agency seeks preliminary relief under Section 13(b) of the FTC Act, there will be an automatic Commission review of the initial decision, briefing will be completed within 45 days of the issuance of the initial decision, and the Commission will issue its final decision within 45 days of the oral argument; in these cases, the final decision will be issued 100 days after the initial decision. For all other cases, parties will need to file a notice of appeal, briefing will be completed within 67 days of the initial decision, and the Commission will issue its final decision within 100 days of the oral argument; in these cases, the Commission will issue its final decision within six months of the initial decision. These deadlines may be adjusted slightly if a deadline falls on a weekend or holiday.

Finally, to allay concerns that the initial comment period was inadequate and to provide an opportunity for public input particularly on rule revisions that reflect changes from the proposed amendments or that were not proposed in the NPRM, the FTC is seeking public comment on the interim final rules. Comments must be received within 30 days after the notice is published in the Federal Register. Instructions for submitting comments are found in the Addresses section of the Federal Register notice.

As observed in the notice issued today, the Commission recognizes that the rule revisions should be considered an important first step, but not the end of the process. To address rule changes that may be needed in the future, the Commission is instructing its internal Standing Committee on the Part 3 rules to make bi-annual recommendations for changes to the rules.

The Commission vote to issue the interim final rules was 4-0. The notice will be available on the FTC’s Web site and likely will be published in the Federal Register by January 5, 2009.

Copies of the Federal Register notice detailing the interim final rules are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

(FTC File No. P072104)

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