FTC Files Comment with Pennsylvania Public Utility Commission About Retail Electricity Pricing and Customer Participation

The FTC has approved the filing of a comment with the Pennsylvania Public Utility Commission (PA PUC) concerning the PA PUC’s implementation plan for its Energy Efficiency and Conservation Program. The comment also replies to the November 18, 2008, presentation made by the Retail Energy Supply Association (RESA) at the PA PUC’s en banc hearing on demand-side response, energy efficiency, and conservation.

According to the FTC comment, dynamic power pricing and demand response involve customers in addressing electric power systems’ most pressing problems, and this has “the potential to enhance consumer welfare and increase economic efficiency at both the wholesale and retail levels.” The Commission commends the Pennsylvania Legislature and the PA PUC for taking the initiative on these important topics, and states that “[m]ore efficient pricing, advanced metering, and improvements in the technology used to determine when (and how much) energy is consumed are all critical to the future performance of the power industry in Pennsylvania and in the United States as whole.”

The comment states that while many of the specific questions proposed at the hearing pertained to Conservation Service Providers, the FTC recommends that these questions be framed in the context of empowering consumers to manage their peak and overall electric power consumption. The comment thus describes several aspects of encouraging demand-side participation, energy efficiency, and conservation as ways to deliver consumer benefits.

The comment also gives examples of how well-designed dynamic pricing and demand response programs can enlist consumers to help meet important challenges facing the power system.

The FTC summarizes its recommendations by stating that the PA PUC should: 1) encourage real-time or other dynamic pricing programs that increase economic efficiency; 2) urge utilities to design and market dynamic pricing programs that appeal to customers; 3) eliminate regulatory provisions that financially penalize power suppliers if they facilitate efficient dynamic pricing; 4) offer fair standby pricing policies for customers with onsite generation investments; and 5) advocate for demand response bid flexibility. The FTC comment states that “[d]ynamic pricing and demand response programs can be powerful tools to empower customers to help manage peak and overall load.”

The Commission vote approving the filing of the comment was 4-0. It was submitted to the Pennsylvania Public Utility Commission on December 17, 2008. (FTC File No. V090001; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

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 62.2008.wpd)

FTC Files Comment with Pennsylvania Public Utility Commission About Retail Electricity Pricing and Customer Participation

The FTC has approved the filing of a comment with the Pennsylvania Public Utility Commission (PA PUC) concerning the PA PUC’s implementation plan for its Energy Efficiency and Conservation Program. The comment also replies to the November 18, 2008, presentation made by the Retail Energy Supply Association (RESA) at the PA PUC’s en banc hearing on demand-side response, energy efficiency, and conservation.

According to the FTC comment, dynamic power pricing and demand response involve customers in addressing electric power systems’ most pressing problems, and this has “the potential to enhance consumer welfare and increase economic efficiency at both the wholesale and retail levels.” The Commission commends the Pennsylvania Legislature and the PA PUC for taking the initiative on these important topics, and states that “[m]ore efficient pricing, advanced metering, and improvements in the technology used to determine when (and how much) energy is consumed are all critical to the future performance of the power industry in Pennsylvania and in the United States as whole.”

The comment states that while many of the specific questions proposed at the hearing pertained to Conservation Service Providers, the FTC recommends that these questions be framed in the context of empowering consumers to manage their peak and overall electric power consumption. The comment thus describes several aspects of encouraging demand-side participation, energy efficiency, and conservation as ways to deliver consumer benefits.

The comment also gives examples of how well-designed dynamic pricing and demand response programs can enlist consumers to help meet important challenges facing the power system.

The FTC summarizes its recommendations by stating that the PA PUC should: 1) encourage real-time or other dynamic pricing programs that increase economic efficiency; 2) urge utilities to design and market dynamic pricing programs that appeal to customers; 3) eliminate regulatory provisions that financially penalize power suppliers if they facilitate efficient dynamic pricing; 4) offer fair standby pricing policies for customers with onsite generation investments; and 5) advocate for demand response bid flexibility. The FTC comment states that “[d]ynamic pricing and demand response programs can be powerful tools to empower customers to help manage peak and overall load.”

The Commission vote approving the filing of the comment was 4-0. It was submitted to the Pennsylvania Public Utility Commission on December 17, 2008. (FTC File No. V090001; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

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 62.2008.wpd)

FTC Issues Third Interim Report to Congresson Results of Studies Required by FACT Act

For Your Information

The Federal Trade Commission has issued an interim report to Congress under Section 319 of the Fair and Accurate Credit Transactions Act of 2003, which requires the FTC to study the accuracy and completeness of information in consumers’ credit reports and to consider methods for improving the accuracy and completeness of such information. The requirement includes five interim reports (every two years from December 2004) and a final report in 2014. The current report (attached) is the third interim report.

The previous interim report to Congress (December 2006) reviewed the results of an initial pilot study designed for testing a potential methodology for a nationwide survey, and it proposed a second pilot study to address certain problems uncovered in the first study. In both pilot studies, randomly selected consumers reviewed their credit reports with an expert to identify potential errors, and then disputed potential errors that the expert believed could have a material effect on their credit standing. The current report explains the methodological improvements tested in this second pilot study. As a next step, in 2009 FTC staff plans to submit a proposal, subject to approval by the Office of Management and Budget, for a nationwide study assessing credit report accuracy.

The Commission’s goal is to conduct a nationwide survey of credit reports that is based on a nationally representative sample, uses a reliable method for identifying errors and omissions, and categorizes errors by type and seriousness in terms of potential consumer harm. The Commission vote authorizing staff to issue the report to Congress was 4-0.

(FACTA accuracy)
(FTC File No. P044804)

Contact Information

MEDIA CONTACT:
Frank Dorman,
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Peter J. Vander Nat,
Bureau of Economics
202-326-3518

FTC Issues Third Interim Report to Congresson Results of Studies Required by FACT Act

For Your Information

The Federal Trade Commission has issued an interim report to Congress under Section 319 of the Fair and Accurate Credit Transactions Act of 2003, which requires the FTC to study the accuracy and completeness of information in consumers’ credit reports and to consider methods for improving the accuracy and completeness of such information. The requirement includes five interim reports (every two years from December 2004) and a final report in 2014. The current report (attached) is the third interim report.

The previous interim report to Congress (December 2006) reviewed the results of an initial pilot study designed for testing a potential methodology for a nationwide survey, and it proposed a second pilot study to address certain problems uncovered in the first study. In both pilot studies, randomly selected consumers reviewed their credit reports with an expert to identify potential errors, and then disputed potential errors that the expert believed could have a material effect on their credit standing. The current report explains the methodological improvements tested in this second pilot study. As a next step, in 2009 FTC staff plans to submit a proposal, subject to approval by the Office of Management and Budget, for a nationwide study assessing credit report accuracy.

The Commission’s goal is to conduct a nationwide survey of credit reports that is based on a nationally representative sample, uses a reliable method for identifying errors and omissions, and categorizes errors by type and seriousness in terms of potential consumer harm. The Commission vote authorizing staff to issue the report to Congress was 4-0.

(FACTA accuracy)
(FTC File No. P044804)

Contact Information

MEDIA CONTACT:
Frank Dorman,
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Peter J. Vander Nat,
Bureau of Economics
202-326-3518

FTC Town Hall to Address Digital Rights Management Technologies

The Federal Trade Commission and the Technology Law and Public Policy Clinic at the University of Washington School of Law will host a conference on the use of digital rights management technologies, a widespread practice that is expected to become increasingly prevalent in the U.S. marketplace in the coming years.

Digital rights management (DRM) refers to technologies typically used by hardware manufacturers, publishers, and copyright holders to attempt to control how consumers access and use media and entertainment content. Among other issues, the workshop will address the need to improve disclosures to consumers about DRM limitations.

WHEN: 8:30 a.m. to 4:45 p.m.
Wednesday, March 25, 2009
WHERE: William H. Gates Hall, Room 133
University of Washington Law School
15th Avenue NE & NE 43rd Street
Seattle, Washington
Directions: http://www.law.washington.edu/About/Direction.aspx
AGENDA: Opening remarks; demonstrations of DRM-related technology; panel discussions regarding burdens on, and benefits for, consumers, and other market and legal issues involving DRM; a review of industry best practices; and consideration of the need for government involvement to better protect consumers.

The Commission invites interested parties to submit requests to be panelists and to recommend other topics for discussion. The requests should be submitted electronically to [email protected] by February 9, 2009. Interested parties should include both a statement detailing their expertise on the issues to be addressed at the Town Hall, and complete contact information. The Commission will select panelists based on their expertise and on the need to represent a range of views.

Interested parties may submit written comments or original research until February 9, 2009. Comments should refer to “DRM Town Hall – Comment, Project No. P094502.” To file electronically, follow the instructions and fill out the form at https://secure.commentworks.com/ftc-DRMtechnologies. Paper comments should include this reference both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex A), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Comments containing confidential material, however, must be filed in paper form, must be clearly labeled “Confidential,” and must comply with Commission Rule 4.9(c). The FTC is requesting that any paper comments be sent by courier or overnight service, if possible, because postal mail in the Washington area and the Commission is subject to delay due to heightened security precautions.

The Town Hall is free, and open to the university community and all members of the public. Pre-registration is not required. Members of the public and press who wish to participate but who cannot attend can view a live webcast on the FTC’s Web site.

Information about accessibility for persons with disabilities on the UW campus is available at https://www.washington.edu/admin/ada/newada.php. Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed, and provide contact information.

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.

(DRM FYI.wpd)

FTC Town Hall to Address Digital Rights Management Technologies

The Federal Trade Commission and the Technology Law and Public Policy Clinic at the University of Washington School of Law will host a conference on the use of digital rights management technologies, a widespread practice that is expected to become increasingly prevalent in the U.S. marketplace in the coming years.

Digital rights management (DRM) refers to technologies typically used by hardware manufacturers, publishers, and copyright holders to attempt to control how consumers access and use media and entertainment content. Among other issues, the workshop will address the need to improve disclosures to consumers about DRM limitations.

WHEN: 8:30 a.m. to 4:45 p.m.
Wednesday, March 25, 2009
WHERE: William H. Gates Hall, Room 133
University of Washington Law School
15th Avenue NE & NE 43rd Street
Seattle, Washington
Directions: http://www.law.washington.edu/About/Direction.aspx
AGENDA: Opening remarks; demonstrations of DRM-related technology; panel discussions regarding burdens on, and benefits for, consumers, and other market and legal issues involving DRM; a review of industry best practices; and consideration of the need for government involvement to better protect consumers.

The Commission invites interested parties to submit requests to be panelists and to recommend other topics for discussion. The requests should be submitted electronically to [email protected] by February 9, 2009. Interested parties should include both a statement detailing their expertise on the issues to be addressed at the Town Hall, and complete contact information. The Commission will select panelists based on their expertise and on the need to represent a range of views.

Interested parties may submit written comments or original research until February 9, 2009. Comments should refer to “DRM Town Hall – Comment, Project No. P094502.” To file electronically, follow the instructions and fill out the form at https://secure.commentworks.com/ftc-DRMtechnologies. Paper comments should include this reference both in the text and on the envelope, and should be mailed or delivered to the following address: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex A), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Comments containing confidential material, however, must be filed in paper form, must be clearly labeled “Confidential,” and must comply with Commission Rule 4.9(c). The FTC is requesting that any paper comments be sent by courier or overnight service, if possible, because postal mail in the Washington area and the Commission is subject to delay due to heightened security precautions.

The Town Hall is free, and open to the university community and all members of the public. Pre-registration is not required. Members of the public and press who wish to participate but who cannot attend can view a live webcast on the FTC’s Web site.

Information about accessibility for persons with disabilities on the UW campus is available at https://www.washington.edu/admin/ada/newada.php. Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed, and provide contact information.

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.

(DRM FYI.wpd)

Economics Director Michael Baye to Leave FTC

Federal Trade Commission Chairman William E. Kovacic announced today that Michael R. Baye, director of the Bureau of Economics for the past year and a half, will leave the FTC on December 31 to return to Indiana University’s Kelley School of Business to continue his role as professor of business economics and public policy. The director serves as the agency’s chief economist, supervises economic analysis at the Commission, and advises the Commission on economic policy matters.

“I am grateful to Mike for his exceptional work at the FTC, his excellent service, and his outstanding achievements. Mike ensured that the FTC made investments in building knowledge that will serve this agency well for decades to come. We have benefitted greatly from his expertise and his insight, his leadership in much of our policy work, and his invaluable guidance in our litigation matters,” Chairman Kovacic said. “We are most fortunate that Pauline Ippolito will take over as Acting Director of the Bureau.”

Since 1997, Baye has served as the Bert Elwert Professor of Business Economics in the Kelley School of Business at Indiana University. His previous appointments include tenured academic positions at Penn State University and Texas A&M University, and visiting appointments at Cambridge and Oxford universities in the United Kingdom. Baye also has served as an independent consultant on a variety of antitrust and pricing matters for the U.S. Department of Justice, the Canadian Competition Bureau, and private clients ranging from small Internet companies to Fortune 500 firms.

Baye’s academic research applies tools from game theory and industrial organization to examine the impact of various business strategies on consumer welfare and firm profits. His studies of pricing strategies in online and other environments where consumers search for price information have been supported by the National Science Foundation and the Fulbright Commission; published in leading economics and marketing journals such as the American Economic Review, Econometrica, Management Science, and the Journal of Political Economy; and featured in The Wall Street Journal, Forbes, and The New York Times. His research on mergers, auctions, and innovation has been published in such journals as the American Economic Review, the Review of Economic Studies, the Economic Journal, and the Journal of Competition Law & Economics.

While at the FTC, Baye promoted effective interaction of economists in the Bureau of
Economics with attorneys in the Bureaus of Competition and Consumer Protection, ensuring that the Bureau’s economic analysis in support of the FTC’s missions was analytically sound and effectively communicated. He was also the public face of the Bureau and traveled extensively to communicate the FTC’s work through speeches, interviews, writings, and personal outreach to lawyers, economists, the general public, foreign antitrust authorities, universities, and other government agencies. Baye’s expertise in the economics of the Internet was of particular value as the Commission analyzed the Google/DoubleClick merger and other antitrust matters involving the online marketplace, as well as in assessing the policy ramifications of various regulations directed at online behavioral advertising.

During Baye’s tenure, the Bureau sponsored a conference on consumer information and the mortgage market that highlighted and assessed the role of consumer information in the current mortgage crisis from an economic perspective. Baye also enhanced the policy research of the Bureau by establishing and holding the first annual Microeconomics Conference (co-sponsored with Northwestern University’s Searle Center and its Center for the Study of Industrial Organization) to bring together academic scholars working in industrial organization, information economics, game theory, quantitative marketing, consumer behavior, and other areas related to the FTC’s antitrust and consumer protection missions.

Ippolito, a nationally recognized scholar, has held a variety of management and staff positions while serving the FTC with distinction for 30 years. She received the Presidential Rank Award of Distinguished Executive, the highest award available to a government executive, for her contributions to improving consumer protection policy for the nation.

Ippolito’s research documents the effects of consumer policy choices on business behavior and consumer welfare. Her work on major policy initiatives has led to improvements in policies for the agency and the nation, as demonstrated by her work on health claims in food advertising and labeling. Her research on resale price maintenance led to changes in antitrust policy, which ultimately has been reflected in Supreme Court jurisprudence. Ippolito has a PhD from Northwestern University.

The Bureau of Economics assists the Commission in evaluating the economic impact of its antitrust and consumer protection actions. The Bureau’s analytical work provides economic advice for enforcement actions, working closely with the bureaus of Competition and Consumer Protection; studies the effects of legislative options and regulations as part of the advocacy program coordinated by the Office of Policy Planning; and analyzes market issues to create economic reports and recommendations on various markets and industries.

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.

(BE Changes 08)

Economics Director Michael Baye to Leave FTC

Federal Trade Commission Chairman William E. Kovacic announced today that Michael R. Baye, director of the Bureau of Economics for the past year and a half, will leave the FTC on December 31 to return to Indiana University’s Kelley School of Business to continue his role as professor of business economics and public policy. The director serves as the agency’s chief economist, supervises economic analysis at the Commission, and advises the Commission on economic policy matters.

“I am grateful to Mike for his exceptional work at the FTC, his excellent service, and his outstanding achievements. Mike ensured that the FTC made investments in building knowledge that will serve this agency well for decades to come. We have benefitted greatly from his expertise and his insight, his leadership in much of our policy work, and his invaluable guidance in our litigation matters,” Chairman Kovacic said. “We are most fortunate that Pauline Ippolito will take over as Acting Director of the Bureau.”

Since 1997, Baye has served as the Bert Elwert Professor of Business Economics in the Kelley School of Business at Indiana University. His previous appointments include tenured academic positions at Penn State University and Texas A&M University, and visiting appointments at Cambridge and Oxford universities in the United Kingdom. Baye also has served as an independent consultant on a variety of antitrust and pricing matters for the U.S. Department of Justice, the Canadian Competition Bureau, and private clients ranging from small Internet companies to Fortune 500 firms.

Baye’s academic research applies tools from game theory and industrial organization to examine the impact of various business strategies on consumer welfare and firm profits. His studies of pricing strategies in online and other environments where consumers search for price information have been supported by the National Science Foundation and the Fulbright Commission; published in leading economics and marketing journals such as the American Economic Review, Econometrica, Management Science, and the Journal of Political Economy; and featured in The Wall Street Journal, Forbes, and The New York Times. His research on mergers, auctions, and innovation has been published in such journals as the American Economic Review, the Review of Economic Studies, the Economic Journal, and the Journal of Competition Law & Economics.

While at the FTC, Baye promoted effective interaction of economists in the Bureau of
Economics with attorneys in the Bureaus of Competition and Consumer Protection, ensuring that the Bureau’s economic analysis in support of the FTC’s missions was analytically sound and effectively communicated. He was also the public face of the Bureau and traveled extensively to communicate the FTC’s work through speeches, interviews, writings, and personal outreach to lawyers, economists, the general public, foreign antitrust authorities, universities, and other government agencies. Baye’s expertise in the economics of the Internet was of particular value as the Commission analyzed the Google/DoubleClick merger and other antitrust matters involving the online marketplace, as well as in assessing the policy ramifications of various regulations directed at online behavioral advertising.

During Baye’s tenure, the Bureau sponsored a conference on consumer information and the mortgage market that highlighted and assessed the role of consumer information in the current mortgage crisis from an economic perspective. Baye also enhanced the policy research of the Bureau by establishing and holding the first annual Microeconomics Conference (co-sponsored with Northwestern University’s Searle Center and its Center for the Study of Industrial Organization) to bring together academic scholars working in industrial organization, information economics, game theory, quantitative marketing, consumer behavior, and other areas related to the FTC’s antitrust and consumer protection missions.

Ippolito, a nationally recognized scholar, has held a variety of management and staff positions while serving the FTC with distinction for 30 years. She received the Presidential Rank Award of Distinguished Executive, the highest award available to a government executive, for her contributions to improving consumer protection policy for the nation.

Ippolito’s research documents the effects of consumer policy choices on business behavior and consumer welfare. Her work on major policy initiatives has led to improvements in policies for the agency and the nation, as demonstrated by her work on health claims in food advertising and labeling. Her research on resale price maintenance led to changes in antitrust policy, which ultimately has been reflected in Supreme Court jurisprudence. Ippolito has a PhD from Northwestern University.

The Bureau of Economics assists the Commission in evaluating the economic impact of its antitrust and consumer protection actions. The Bureau’s analytical work provides economic advice for enforcement actions, working closely with the bureaus of Competition and Consumer Protection; studies the effects of legislative options and regulations as part of the advocacy program coordinated by the Office of Policy Planning; and analyzes market issues to create economic reports and recommendations on various markets and industries.

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.

(BE Changes 08)

FTC Intervenes in Teva Pharmaceutical Industries’ Proposed $8.9 Billion Acquisition of Barr Pharmaceuticals

Teva Pharmaceuticals Industries Ltd.’s has settled Federal Trade Commission charges that its proposed $8.9 billion acquisition of rival generic drugmaker Barr Pharmaceuticals Inc. would be anticompetitive and violate federal law. The consent order requires Teva and Barr to sell assets in 29 U.S. markets, including generic drugs commonly used to treat acid reflux disease, various types of cancer, bacterial infections, diabetes, and depression. The rights to manufacture and market the drugs will be divided between Watson Pharmaceuticals and Qualitest Pharmaceuticals, both of which already are competitors in other generic drug markets.

“Teva and Barr are direct and significant competitors for a large number of generic drugs that many Americans use on a daily basis,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “The Commission’s action taken today will ensure that the markets for these vital drugs remain competitive and consumers are not forced to pay higher prices, or even forego treatment, as a result of this deal.”

According to the Commission’s complaint, Teva’s acquisition of Barr as proposed would violate federal law by lessening competition in each of the following U.S. generic drug markets: 1) tetracycline hydrochloride (HCl) capsules; 2) chlorzoxazone tablets; 3) desmopressin acetate tablets; 4) metoclopramide HCl tablets; 5) carboplatin injection; 6) tamoxifen citrate tablets; 7) metronidazole tablets; 8) trazodone HCl tablets; 9) glipizide/metformin HCl tablets; 10) cyclosporine liquid; 11) cyclosporine capsules; 12) flutamide capsules; 13) mirtazapine orally disintegrating tablets (ODT) ; 14) deferoxamine injection; 15) epoprostenol sodium (freeze-dried powder) injection (epop); 16) weekly fluoxetine capsules; and 17) 13 generic oral contraceptive markets.

The Commission contends that the proposed transaction would eliminate one of up to four competitors in each of the relevant markets, eliminating actual, direct, and substantialcompetition between Teva and Barr, and increasing the likelihood that consumers will pay higher prices for these generic drugs. In addition, due to the specific characteristics of the drugs at issue, firms in the market will find it easier to coordinate their pricing if the divestitures were not required. A combined Teva-Barr also could exercise unilateral market power in certain markets without the divestitures the consent order requires.

The FTC contends that entry into the market for manufacturing and selling the relevant drugs would not be timely, likely, or sufficient to counteract the anticompetitive impacts of the acquisition. It estimates that the combination of the time needed to develop new drugs and gain U.S. Food and Drug Administration (FDA) approval would typically be at least two years. Further, some of the relevant markets are relatively small and in decline, so the sales opportunities for a new entrant likely would be insufficient to warrant the time and investment needed to enter the relevant markets.

The FTC’s order is designed to remedy the anticompetitive impacts of the proposed transaction. Under the terms of the proposed consent agreement, the companies would be required to assign and divest to Watson, Teva’s rights and assets for generic: 1) chlorzoxazone tablets; 2) deferoxamine injection; 3) fluoxetine weekly capsules; 4) carboplatin injection; and 5) metronidazole tablets. The consent agreement also requires the companies to assign and divest to Watson all of Barr’s rights and assets for generic: 1) metoclopramide HCl tablets; 2) cyclosporine liquid; 3) cyclosporine capsules; 4) desmopressin acetate tablets; 5) epop; 6) flutamide capsules; 7) glipizide/metformin HCl tablets; 8) mirtazapine ODT; 9) tamoxifen citrate tablets; and 10) tetracycline HCl capsules. In addition, the companies must divest rights and assets related to trazodone HCl tablets and the 13 oral contraceptive products to Qualitest. A description of each product market, what the drug(s) treats, and the relative market shares held by Teva, Barr, and their competitors can be found in the Commission’s analysis to aid public comment on the FTC’s Web site at http://www.ftc.gov/os/caselist/0810224/index.shtm.

If the FTC determines that either Watson or Qualitest is not an acceptable acquirer of the assets to be divested, the companies must unwind the proposed sales and sell the assets to another Commission-approved buyer within six months of when the order becomes final. If they don’t meet this deadline, the FTC may appoint a trustee to oversee the assets’ sale. Finally, the order contains several provisions to ensure the assets are successfully divested, including requiring Teva and Barr to provide transitional services to enable the buyers to obtain necessary FDA approvals. The FTC also has appointed William Rahe of Quantic Regulatory Services, LLC to oversee the asset transfer and to ensure Teva and Barr comply with the terms of the order.

The Commission vote to accept the complaint and consent order and place copies on the public record was 4-0. 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/0810224/index.shtm.

The agreement will be subject to public comment for 30 days, beginning today and continuing through January 19, 2009, after which the Commission will decide whether to makeit 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. 081-0224)
(Teva-Barr.final.wpd)

FTC Settles Charges with Telemarketers Who Duped Elderly Consumers

At the request of the Federal Trade Commission, a federal district court has entered orders settling charges against three telemarketers who allegedly duped consumers, most of whom were elderly, into buying grossly overpriced household products such as garbage bags and light bulbs. The FTC’s complaint alleges that the telemarketers falsely claimed that the proceeds from the sales would be used to benefit handicapped and disabled individuals.

According to the FTC, the defendants harassed some consumers into buying these products, charged consumers’ credit and debit cards, debited their bank accounts without the consumers’ authorizations, and called consumers who either had registered their telephone numbers on the FTC’s National Do Not Call (DNC) Registry or had previously told the defendants that they did not want to be called again.

The three settlements announced today prohibit defendants George Thomas, Joshua Abramson, and Bruce Peeples from making deceptive and misleading statements in violation of the FTC Act, and from violating the Unordered Merchandise Statute, which prohibits mailing products to, or billing consumers for, products that they did not agree to purchase. The orders also hold the defendants jointly liable for a judgment of more than $13 million, the majority of which has been suspended due to their inability to pay. Abramson and Thomas also are barred from violating the Telemarketing Sales Rule (TSR), and Peeples is permanently barred from telemarketing. These settlements end the FTC’s case against Handicapped & Disabled Workshops, Inc., Handi-Hope Industries, Inc., and Handi-Ship LLC, and their principals Peeples and Abramson, and manager Thomas.

On May 14, 2008, the U.S. District Court in Arizona granted the Commission’s request for a temporary restraining order and asset freeze against Peeples, Abramson, Thomas and the corporate defendants and appointment of a receiver to take control of the corporate defendants. The court also entered a stipulated preliminary injunction against the individual and corporate defendants on May 27, 2008.

While the case was being litigated, the Commission filed an amended complaint that added two new counts against the individual defendants, the first charging the defendants with violating the FTC Act through their false statements to consumers that buying the defendants’ products would benefit handicapped and disabled people, and the second alleging that these false statements were made to induce consumers to pay for products, in violation of the TSR. These counts were not brought against the corporate defendants because the Commission had already obtained a default judgment against them by the time the amended complaint was filed.

Each final order contains both conduct and monetary relief. First, the orders prohibit each individual defendant from violating the FTC Act by making material misrepresentations to consumers including that: 1) any consumer’s purchase will help handicapped or disabled people, 2) the person soliciting any consumer’s purchase is handicapped or disabled, 3) all or most of the people working for the defendant are handicapped or disabled, 4) any handicapped or disabled person packages the products sold by the defendant, and 5) the defendant operates a charitable organization. The orders also bar the individual defendants from violating the Unordered Merchandise Statute by falsely claiming that any consumer has ordered, purchased, or agreed to order or purchase any products and therefore owes them money.

In addition, the orders prohibit the individual defendants from making false claims about: 1) the total cost to buy, receive, or use any of the goods or services they are selling, 2) any restrictions, limitations, or conditions on the sale, 3) anything material to the terms of a refund, cancellation, exchange, or refund policy, or 4) any material aspect of the performance, efficacy, nature, or characteristics of the products being offered for sale.

The orders also contain a $13,411,918 judgment against each individual defendant, representing the total amount of harm caused to consumers over the past three years. Most of this amount has been suspended based on defendants’ inability to pay, but each defendant must surrender his right to assets already frozen by the court – $33,290 for Peeples, $29,448 for Abramson, and $2,380 for Thomas. In addition, the full amount of the judgment becomes due if any individual defendant is later found to have misrepresented his own or his companies’ financial condition to the FTC.

The Commission vote authorizing the staff to file the amended complaint and approving consents in settlement of the court actions against defendants Peeples, Abramson, and Thomas was 4-0. The documents were filed in the U.S. District Court for the District of Arizona on December 4, 2008, and entered by the court on December 10, 2008.

The court actions announced today settle the FTC’s charges against the three individual defendants in this case. On October 14, 2008, the court entered a default judgment against their companies. The default judgment requires the corporate defendants to pay $13,411,918 and to forfeit all of their assets. Finally, the court also has entered an order winding down the corporate defendants and dissolving the receivership set up in this case.

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the stipulated final judgments are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. 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. X080035; Civ. No. CV-08-0908-PHX-DGC)