[Federal Register Volume 59, Number 130 (Friday, July 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16513]


[[Page Unknown]]

[Federal Register: July 8, 1994]


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FEDERAL TRADE COMMISSION

16 CFR Parts 2 and 4

 

Procedures for Review of Compliance Reports and Delegation of 
Authority To Resolve Confidentiality Issues

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission amends 16 CFR Parts 2 and 4 to 
streamline the processing of compliance reports and to delegate to the 
General Counsel the authority to resolve confidentiality issues 
respecting information in compliance reports and in other documents 
subject to routine placement on the public record. These amendments are 
intended to improve efficiency and reduce delays in connection with the 
processing of compliance reports and the resolution of confidentiality 
issues by the agency.

EFFECTIVE DATE: July 8, 1994.

FOR FURTHER INFORMATION CONTACT: Robert M. Frisby, Attorney, Bureau of 
Consumer Protection, 202-326-2098.

SUPPLEMENTARY INFORMATION:

Compliance Procedures

    The Commission is revising its procedures for processing compliance 
reports submitted pursuant to Commission orders and pursuant to section 
2.41(a) of the Commission's Rules of Practice, 16 CFR 2.41(a). Under 
former section 2.41(b) of the rules, most compliance reports were 
either ``approved'' or ``rejected,'' although the Commission could 
bring a civil penalty case pursuant to section 5(l) of the FTC Act, 15 
U.S.C. 45(l), without any prior notice to the respondents. See 16 CFR 
2.41(a). Henceforth, there will be no provision for Commission approval 
or rejection of compliance reports; rather, staff will review these 
reports and determine whether to recommend that the Commission take 
further action, such as commencing a civil penalty case for failure to 
comply with the order.1 Staff may also, in appropriate cases, 
advise a respondent that a compliance report appears inadequate and 
request that the report be supplemented with additional material that 
shall be deemed part of the report.
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    \1\This amendment does not revise the approval process relating 
to proposed divestitures, acquisitions, or similar transactions 
subject to Commission review pursuant to 16 CFR 2.41(f).
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    Under the former rules, there was a limited delegation by the 
Commission to the Directors and Deputy Directors of the Bureaus of 
Competition and Consumer Protection of the authority to approve or 
reject most types of compliance reports after five days notice to the 
Commission. However, the Commission had reserved for itself the 
authority to review, and if warranted to approve or reject four 
categories of reports: (1) Most reports involving section 7 of the 
Clayton Act; (2) reports in matters which had received previous 
Commission consideration as to compliance or in which the Commission or 
any Commissioner had expressed an interest; (3) reports in matters 
proposed to be closed by reason of expense of investigation or testing, 
and (4) reports in matters involving substantial questions as to the 
public interest, Commission policy or statutory construction.
    Under the new rules, the Director, Deputy Directors, and Assistant 
Director for Compliance of the Bureau of Competition and the Director, 
Deputy Directors, and Associate Director for Enforcement of the Bureau 
of Consumer Protection will be delegated the authority to monitor 
compliance reports, and to open and close compliance investigations, 
subject to the requirement that staff submit an analysis regarding 
their intended actions to the Commission for any report falling within 
categories (2), (3), or (4) above. Many compliance reports involving 
section 7 of the Clayton Act do not raise issues that require 
Commission review. Therefore, the staff will not have to submit an 
analysis regarding their intended actions with respect to such reports 
unless they fall within categories (2), (3), or (4) above. The result 
of the new rules will be to continue to have the Commission advised of 
compliance matters of special priority, while promoting the efficient 
use of Commission resources.

Confidentiality Requests

    The Commission is also amending its rules of practice to delegate 
to the General Counsel the authority to resolve confidentiality issues 
with respect to information in documents subject to disclosure on the 
public record. Section 4.9(b) of the Commission's Rules of Practice, 16 
CFR 4.9(b), provides that certain categories of documents are routinely 
placed on the public record.2 However, the rules also provide that 
portions of compliance reports and other documents subject to routine 
placement on the public record will be withheld from public disclosure 
if the submitter can make an adequate showing of confidentiality, 16 
CFR 2.41(f), 4.9(b)(7), 4.9(c)(1), or if the documents are otherwise 
exempt from mandatory public disclosure, 16 CFR 4.9(c)(3) and 
4.10.3 Under the revised rule, the General Counsel has the 
authority to resolve confidentiality issues respecting such materials. 
The General Counsel has substantial expertise in resolving 
confidentiality issues, and already resolves numerous other 
confidentiality issues. See, e.g., 16 CFR 4.11(a)(2) (appeals under the 
Freedom of Information Act); 4.11(e) (subpoenas to Commission 
employees).
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    \2\Section 4.9(b) sets forth a list of materials subject to 
public disclosure. Some of the public record requirements set forth 
in section 4.9(b) also appear in other rules. See, e.g., 16 CFR 
2.41(f).
    \3\Although confidentiality issues will generally be raised by 
submitters, Bureau staff may identify a confidentiality issue that 
submitters failed to raise. For example, submitters may not identify 
as confidential information in a compliance report filed pursuant to 
a credit practices order that reveals personal information about 
debtors. Such materials may be withheld from the public record, 
under section 4.9(c)(3), to the extent that they are exempt from 
mandatory public disclosure under the Freedom of Information Act, 5 
U.S.C. Sec. 552.
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    In addition, the Commission is amending section 4.9(b) of its rules 
to provide for placement on the public record of staff letters to 
respondents advising them that their compliance reports do not warrant 
any further action. This amendment will afford such letters the same 
treatment as closing letters sent to the targets of Commission law 
enforcement investigations--See 16 CFR 4.9(b)(4)(ii) (provides for 
placement of closing letters in initial and full phase investigations 
on the public record)--and the same treatment as the compliance reports 
themselves. See 16 CFR 4.9(b)(7)(i).
    As required by the Regulatory Flexibility Act, 5 U.S.C. 604, it is 
hereby certified that this rule will not have a significant economic 
impact on small business entities. The agency did not seek or accept 
public comments on these amendments because they address rules of 
agency organization, procedure, or practice. See 5 U.S.C. 553(b)(A).

List of Subjects

16 CFR Part 2

    Administrative practice and procedure, Investigations, Reporting 
and recordkeeping requirements.

16 CFR Part 4

    Administrative practice and procedure, Freedom of information, 
Privacy, Sunshine Act.

PART 2--NONADJUDICATIVE PROCEDURES

    1. The authority for part 2 continues to read as follows:

    Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46, unless otherwise 
noted.

    2. Section 2.33 is revised to read as follows:


Sec. 2.33  Compliance procedure.

    The Commission may in its discretion require that a proposed 
agreement containing an order to cease and desist be accompanied by an 
initial report signed by the respondent setting forth in precise detail 
the manner in which the respondent will comply with the order when and 
if entered. Such report will not become part of the public record 
unless and until the accompanying agreement and order are accepted by 
the Commission. At the time any such report is submitted a respondent 
may request confidentiality for any portion thereof with a precise 
showing of justification therefore, and the General Counsel with due 
regard to statutory restrictions, the Commission's rules, and the 
public interest will act upon such request.
    3. Sections 2.41 (a), (b), (e), and (f) are revised to read as 
follows:


Sec. 2.41  Reports of compliance.

    (a) In every proceeding in which the Commission has issued an 
order, pursuant to the provisions of section 5 of the Federal Trade 
Commission Act or section 11 of the Clayton Act, as amended, and except 
as otherwise specifically provided in any such order, each respondent 
named in such order shall file with the Commission, within sixty (60) 
days after service thereof, or within such other time as may be 
provided by the order or the rules in this chapter, a report in 
writing, signed by the respondent, setting forth in detail the manner 
and form of his compliance with the order, and shall thereafter file 
with the Commission such further signed, written reports of compliance 
as it may require. Reports of compliance shall be under oath if so 
requested. Where the order prohibits the use of a false advertisement 
of a food, drug, device, or cosmetic which may be injurious to health 
because of results from its use under the conditions prescribed in the 
advertisement, or under such conditions as are customary or usual, or 
if the use of such advertisement is with intent to defraud or mislead, 
or in any other case where the circumstances so warrant, the order may 
provide for an interim report stating whether and how respondents 
intend to comply to be filed within ten (10) days after service of the 
order. When court review of an order of the Commission is pending, the 
respondent shall file only such reports of compliance as the court may 
require. Thereafter, the time for filing a report of compliance shall 
begin to run de novo from the final judicial determination, except that 
if no petition for certiorari has been filed following affirmance of 
the order of the Commission by a court of appeals, the compliance 
report shall be due the day following the date on which the time 
expires for the filing of such petition. Staff of the Bureaus of 
Competition and Consumer Protection will review such reports of 
compliance and may advise each respondent whether the staff intends to 
recommend that the Commission take any enforcement action. The 
Commission may, however, institute proceedings, including certification 
of facts to the Attorney General pursuant to the provisions of section 
5(l) of the Federal Trade Commission Act (15 U.S.C. 45(l)) and section 
11(1) of the Clayton Act, as amended (15 U.S.C. 21(1)), to enforce 
compliance with an order, without advising a respondent whether the 
actions set forth in a report of compliance evidence compliance with 
the Commission's order or without prior notice of any kind to a 
respondent.
    (b) The Commission has delegated to the Director, the Deputy 
Directors, and the Assistant Director for Compliance of the Bureau of 
Competition, and to the Director, the Deputy Directors, and the 
Associate Director for Enforcement of the Bureau of Consumer Protection 
the authority to monitor compliance reports and to open and close 
compliance investigations. With respect to any compliance matter which 
has received previous Commission consideration as to compliance or in 
which the Commission or any Commissioner has expressed an interest, any 
matter proposed to be closed by reason of expense of investigation or 
testing, or any matter involving substantial questions as to the public 
interest, Commission policy or statutory construction, the Bureaus 
shall submit an analysis to the Commission regarding their intended 
actions.
* * * * *
    (e) The Commission may at any time reconsider any advice given 
under this section and, where the public interest requires, rescind or 
revoke its prior advice. In such event the respondent will be given 
notice of the Commission's intent to revoke or rescind and will be 
given an opportunity to submit its views to the Commission. The 
Commission will not proceed against a respondent for violation of an 
order with respect to any action which was taken in good faith reliance 
upon the Commission's advice under this section, where all relevant 
facts were fully, completely, and accurately presented to the 
Commission and where such action was promptly discontinued upon 
notification of rescission or revocation of the Commission's advice.
    (f) All applications for approval of proposed divestitures, 
acquisitions, or similar transactions subject to Commission review 
under outstanding orders, together with supporting materials, will be 
placed on the public record as soon after they are received as 
circumstances permit, except for information for which confidential 
classification has been requested, with a showing of justification 
therefor, and which the General Counsel, with due regard to statutory 
restrictions, the Commission's rules, and the public interest, has 
determined should not be made public. Within thirty (30) days after 
such requests and materials are placed on the public record, any person 
may file formal written objections or comments with the Secretary of 
the Commission. Such objections or comments shall be placed on the 
public record except for information for which confidentiality has been 
requested, with a showing of justification therefor, and which the 
General Counsel with due regard to statutory restrictions, the 
Commission's rules, and the public interest, has determined should not 
be made public. Additionally, any communications, written or oral, 
concerning such proposed transactions, received by any individual 
member of the Commission, or by any employee involved in the decisional 
process, will be placed on the public record immediately after their 
receipt. In the case of an oral communication, the member or employee 
shall immediately furnish the Commission with a memorandum setting 
forth the full contents of such communication and the circumstances 
thereof, and such memorandum will immediately be placed on the public 
record. All responses to applications for approval of proposed 
divestitures, acquisitions, or similar transactions subject to 
Commission review under outstanding orders, together with a statement 
of supporting reasons, will be published when made.

PART 4--MISCELLANEOUS RULES

    4. The authority for part 4 continues to read as follows:

    Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.

    5. Section 4.9(b)(7)(i), (c)(1) and (c)(3) are revised to read as 
follows:


Sec. 4.9.   Public records.

* * * * *
    (b) * * *
    (7) Compliance/Enforcement (16 CFR 2.33, 2.41). (i) Reports of 
compliance filed pursuant to the rules in this chapter or pursuant to a 
provision in a Commission order and supplemental materials filed in 
connection with these reports, except for reports of compliance, and 
supplemental materials filed in connection with Commission orders 
requiring divestitures or establishment of business enterprises or 
facilities, which are confidential until the last divestiture or 
establishment of a business enterprise or facility, as required by a 
particular order, has been finally approved by the Commission, and 
staff letters to respondents advising them that their compliance 
reports do not warrant any further action. At the time each such report 
is submitted the filing party may request confidential treatment in 
whole or in part and submit satisfactory reasons therefor, and the 
General Counsel with due regard for statutory restrictions, the 
Commission's rules and the public interest will pass upon such request;
* * * * *
    (c) Confidentiality and in camera records. (1) Persons submitting 
documentary material to the Commission described in this section may 
designate that material or portions of it confidential and request that 
it be withheld from the public record. No such material or portions of 
material (including documents generated by the Commission or its staff 
containing or reflecting such material or portions of material) will be 
placed on the public record pursuant to this section until the General 
Counsel has ruled on the request for confidential treatment and 
provided any prior notice to the submitter required by law. All 
requests for confidential treatment shall be supported by a showing of 
justification in light of applicable statutes, rules, orders of the 
Commission or its administrative law judges, orders of the courts, or 
other relevant authority.
* * * * *
    (3) To the extent that any documents or portions of documents 
otherwise falling within Sec. 4.9(b) of this section contain 
information that would be exempt from mandatory public disclosure under 
Sec. 4.10 of this part, the General Counsel may determine to withhold 
such materials from the public record.

    By direction of the Commission, Commissioner Owen dissenting.
Donald S. Clark,
Secretary.
[FR Doc. 94-16513 Filed 7-7-94; 8:45 am]
BILLING CODE 6750-01-P