[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Notices]
[Pages 26607-26610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12661]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request; Extension
AGENCY: Federal Trade Commission.
ACTION: Notice.
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SUMMARY: The FTC is soliciting public comments on proposed extensions
of Paperwork Reduction Act clearances for information collection
requirements for a regulation that the Commission issues and enforces
and for a study to assess the effectiveness of Commission divestiture
orders in merger cases. These Office of Management and Budget (OMB)
clearances expire on July 31, 1998. The FTC proposes that OMB extend
its approval for the regulation an additional three years from
clearance expiration and that approval for the divestiture order study
be extended through December 31, 1999. The proposed information
collection requirements described below will be submitted to OMB for
review, as required by the Paperwork Reduction Act.
DATES: Comments must be submitted on or before July 13, 1998.
ADDRESSES: Send written comments to Gary M. Greenfield, Office of the
General Counsel, Federal Trade Commission, Washington, D.C. 20580,
(202) 326-2753. All comments should be identified as responding to this
notice.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or copies of the proposed
information requirements should be addressed to Gary M. Greenfield,
Attorney, Office of the General Counsel, 202-326-2753.
SUPPLEMENTARY INFORMATION: The purpose of this Notice is to solicit
comments from members of the public
[[Page 26608]]
and affected agencies concerning the proposed collections of
information to: (1) Evaluate whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (2) Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (3) Enhance the
quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who
are to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology, e.g., permitting electronic
submission of responses. The FTC will submit the proposed information
collection requirements to OMB for review, as required by the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended).
The relevant information collection requirements are as follows:
1. The Telemarketing Sales Rule, 16 CFR Part 310 (OMB Control
Number 3084-0097)
Description of the collection of information and proposed use: The
Telemarketing Sales Rule implements the Telemarketing and Consumer
Fraud and Abuse Prevention Act, 15 U.S.C. 6101-6108 (``Telemarketing
Act'' or ``the Act''). The Act seeks to prevent deceptive or abusive
telemarketing practices. The Act mandates certain disclosures by
telemarketers, and directs the Commission to consider recordkeeping
requirements in its promulgation of a telemarketing rule to address
such practices. As required by the Act, the Telemarketing Rule mandates
certain disclosures regarding telephone sales and requires
telemarketers to retain certain records regarding advertising, sales,
and employees. The disclosures provide consumers with information
necessary to make informed purchasing decisions. The records are
available for inspection by the Commission and other law enforcement
personnel to determine compliance with the Rule.
Estimate of information collection annual hourly burden: 9,053,000
hours. The estimated recordkeeping burden hours are 50,000. The
estimated combined burden hours related to the required disclosures
under the Rule are 9,003,000, for an estimated total of 9,053,000
burden hours.
Recordkeeping: At the time the Commission issued the Rule, it
estimated that during the initial and subsequent years after the Rule
took effect, only 100 entities a year would find it necessary to revise
their practices to conform with the Rule and that it would take each
such entity approximately 100 hours to assemble information or develop
a compliant recordkeeping system, for a total of 10,000 burden hours a
year. The Commission received no comments of any kind in connection
with this estimate when it was issued and this estimate continues to be
appropriate. There is no reason to believe that the number of new
entrants into the telemarketing field who find it necessary to create a
different recordkeeping system as a result of the Rule's recordkeeping
requirements has increased. Of the estimated 39,900 industry members
who have already assembled or maintained the required records and
recordkeeping system, staff estimates that each member requires only
one hour a year to comply with the Rule's recordkeeping requirements
(39,900 hours). Therefore, the total yearly burden hours associated
with the Rule's recordkeeping requirements is 49,900. The Commission
requests this figure be rounded to 50,000 hours.
Disclosure: In connection with issuing the Rule and obtaining MOB
clearance, staff previously estimated that the 39,900 (rounded to
40,000) industry members make approximately 9 billion calls per year,
or 225,000 calls per year per company. The Telemarketing Sale Rule
provides that if an industry member chooses to solicit inbound calls
from consumers by advertising media other than direct mail or by using
direct mail solicitations that make certain required disclosures, that
member is exempted from complying with other disclosures required by
the Rule. Because the burden of complying with written disclosures is
less than the burden of complying with the Rule's oral disclosure
requirements, staff estimated that at least 9,000 firms will choose to
adopt marketing methods that exempt them from the oral disclosure
requirements.
In connection with issuing the Rule, staff estimated that it takes
7 seconds for telemarketers to disclose the required outbound call
information described above. Staff also estimated that at least 60% of
calls result in ``hang-ups'' before the seller or telemarketer can make
all the required disclosures. Staff estimated that ``hang-up'' calls
last for only 2 seconds. Accordingly, staff estimates that the total
disclosure burden associated with these initial disclosure requirements
is approximately 250 hours per firm (90,000 non-hang up calls (40% of
225,000) x 7 seconds per call + 135,000 hang-up calls (60% of
225,000) x 2 seconds per call). Thus, the total burden for the 31,000
firms choosing marketing methods that require these oral disclosures is
7.75 million hours. When the Commission initially published this
estimate, it received no comments and staff believes such estimates
remain appropriate.
The Rule also requires additional disclosures before the customer
pays for goods or services. Specifically, the sellers or telemarketers
must disclose the total costs to purchase, receive, or use the offered
goods or services; all material restrictions; and all material terms
and conditions of the seller's refund, cancellation, exchange, or
repurchase policies if a representation about the policy is a part of
the sales offer. If a prize promotion is involved, the telemarketer
must also disclose information about the non-purchase entry method for
the prize promotion. Staff estimates that approximately 10 seconds is
necessary to make these required disclosures. However, these
disclosures need only be made where a call results in an actual sale or
before the consumer pays. Staff estimates that sales occur in
approximately 6 percent of telemarketing calls. Accordingly, the
estimated burden for the disclosures is 37.5 hours per firm (13,500
calls--6% of 225,000--resulting in a sale x 10 seconds) or 1.163
million hours for the 31,000 firms choosing marketing methods that
require oral disclosures. When the Commission initially published this
estimate, it received no comments and staff believes such estimates
remain appropriate.
Alternatively, the disclosures required before the customer pays
for goods or services may be in writing. Usually, this would occur
during a solicitation or mass mailing. Staff estimates that
approximately 9,000 firms will choose to comply with this optional
written disclosure requirement. Those firms are likely to be the same
firms that would choose to advertise through written materials, and the
burden of adding the disclosures required by the Rule is probably
minimal. However, staff has no reliable data from which to conclude
that there is no separately identifiable burden associated with this
provision. Therefore, staff estimates that a typical firm will spend
approximately 10 hours per year engaged in activities ensuring
compliance with this provision of the Rule, for an estimated burden of
90,000 hours. When the Commission initially published this estimate, it
received no
[[Page 26609]]
comments and staff believes such estimates remain appropriate.
Estimate of information collection and cost burden: $34,411,000.
(a) Total capital and start up costs: Staff estimates that the
capital and start up costs associated with the Telemarketing Sales
Rule's information collection requirements are de minimis. The Rule's
recordkeeping requirements do not mandate that records be kept in any
particular form. While the recordkeeping requirements necessitate that
the affected entity have some storage device, virtually every entity is
likely to already possess the means to store the required records. Most
entities keep the type of records required by the Rule in the ordinary
course of business. Even assuming that an entity found it necessary to
purchase a storage device, which could be as inexpensive as a cardboard
box, when the cost of the device is annualized over its useful life,
the annual expenditure is likely to be very small.
The Rule's disclosure requirements require no capital expenditures.
(b) Total operation/maintenance/purchase of services costs: The
Rule's recordkeeping requirements necessitate that companies maintain
records. Accordingly, affected entities have to expend some capital on
office supplies such as file folders, computer diskettes, or paper in
order to comply with the Rule's recordkeeping requirements. Although
staff believes that most affected entities would maintain the required
records in the ordinary course of business, staff estimates that the
approximately 40,000 industry members affected by the Rule spend an
annual amount of $50 each on office supplies as a result of the Rule's
recordkeeping requirements, for a total recordkeeping cost burden of
$2,000,000.
In connection with the Rule's disclosure requirements,
telemarketing firms may incur additional costs for telephone service,
assuming that the firms spend more time on the telephone with customers
as a result of the required disclosures. As indicated above, staff
believes that the hour burdens relating to the required disclosures
amount to 9,003,000 hours. Assuming all calls to customers are long
distance and a commercial calling rate of 6 cents per minute ($3.60 an
hour), affected entities as a whole may incur up to $32,410,800 in
telecommunications costs as a result of the Rule's disclosure
requirements.
As indicated previously, staff estimates that approximately 9,000
entities will choose to comply with the Rule through written
disclosures. However, staff estimated that those companies incur no
additional capital expenses as a result of the Rule's requirements
because they are likely to provide written information to prospective
customers in the ordinary course of business and adding the required
disclosures to that written information does not require any
supplemental expenditures. Thus, the total estimated cost burdens
associated with the Rule's information collection is $34,411,000
(rounded to nearest thousand).
2. Study of the Effectiveness of Commission Divestiture Orders in
Merger Cases (OMB Control Number 3084-0115)
Description of the collection of information and proposed use: The
Commission is directed to prevent ``unfair methods of competition''
under Section 5 of the Federal Trade Commission Act (``FTC Act''), 15
U.S.C. 45, and is authorized to enforce the Clayton Act's proscriptions
against anticompetitive mergers. 15 U.S.C. 18, 21. Under these general
authorities, the Commission examines transactions to determine whether
anticompetitive effects are likely and then fashions remedies that it
believes are necessary to alleviate the likely anticompetivie effects.
In 1978, the Commission began a divestiture remedy similar to what
appears in current orders. Generally, respondents are asked to divest a
package of assets (deemed to be commercially viable based on the
investigative staff's knowledge of the relevant market) within a
specified time to a buyer to be approved by the Commission.
In 1995, the FTC's Bureau of Competition and Bureau of Economics
undertook a pilot study to determine whether a more comprehensive study
of Commission divestiture orders would be feasible and productive. The
staff concluded that further study is necessary to draw more general
conclusions about the effectiveness of the Commission's divestiture
process as the circumstances surrounding the orders vary widely. OMB
subsequently granted clearance for such an expanded study. Pursuant to
that authority, FTC staff have interviewed numerous buyers of assets or
businesses and respondents in the study. As with the pilot study, the
information that staff have obtained continues to offer important
insights into the effectiveness of the divestiture process.
Accordingly, the Commission's Bureau of Competition and Bureau of
Economics staff will continue to conduct interviews with buyers and
respondents in order to complete its review of the 36 sample orders
comprising its study. Thereafter, staff will interview third-parties
and solicit sales data from buyers and respondents. The objectives of
the study continue to be to determine: (1) The effectiveness of
Commission orders that seek to preserve or reestablish competition
where the Commission has permitted a merger but required divestiture of
certain assets; (2) The influence of certain provisions in Commission
orders (e.g., length of time permitted for divestiture of ``crown
jewel'' provisions) on the timeliness of divestitures and on the
success of the business or assets divested; (3) The influence of
divestiture procedures used by respondent to find a buyer on the
timeliness of the divestitures and on the success of the business or
assets divested; (4) The influence of the divestiture contract on the
success of the divested business or assets; (5) The influence of the
type of assets divested on the success of the divested business; (6)
The influence of the type of buyer on the success of the divested
business; and (7) Whether respondents have fully complied with the
requirements under the order.
Securing information about the success of divested businesses (or
businesses that have acquired divested assets) would provide a better
understanding of the kind of order provisions most likely to lead to
successful divestitures. The survey is designed to expand the
Commission's knowledge by eliciting, across a broad spectrum of
industries, information to evaluate the success of divestitures. Such
information is likely to enhance the Commission's law enforcement
mission.
Estimate of information collection annual hourly burden: 1,000
hours (rounded). The information to be collected will be obtained by
telephone interviews, document requests, and a questionnaire. Staff
will conduct telephone interviews with respondents, buyers of divested
assets or businesses, and third parties (such as competitors,
customers, and suppliers). The divestiture study includes a total of 51
divestitures arising out of 36 orders. Staff have already interviewed
32 buyers and 6 respondents; thus it will contact another 19 buyers and
30 respondents. It will also contact 153 third-parties (on average,
three per divestiture) for a total of 202 remaining telephone
interviews. All of the remaining interviews, like those already
conducted, should take about 1.5 hours to complete, for a total burden
estimate of approximately 303 hours.
[[Page 26610]]
After interviewing buyers and respondents, staff will ask them to
submit financial documents for a five-year period beginning the year
before the divestiture occurred. To the extent that no such financial
documents exist, staff will not request that such documents be
prepared. Because only documents already in existence will be
requested, the anticipated burden of producing these documents will be
minimal, approximately two hours per participant, for a total of 174
hours (51 buyers + 36 respondents=87, 87 x 2=174).
Staff is also asking respondents and buyers to complete a two-
question chart that requests sales in dollars and units of the product
that was the subject of the Commission's concern in the case over a
five-year period beginning the year before the divestiture. Staff
estimates that the burden on each participant to provide this
information will be 4 hours, for a total of 348 hours (51 buyers + 36
respondents =87, 87 x 4=348). The total cumulative burden of the
document production will be 522 hours (174+348). The estimated total
burden for the entire study is therefore calculated to be 825 hours
(303+522), which has been rounded to 1,000 hours to allow for small
additions such as subsequent buyers of divested assets.
Estimate of Information Collection Annual Cost Burden: none.
Capital equipment/start-up/operation and maintenance/other non-
labor costs: Not applicable. The date for the study are being collected
in two principal ways. Staff is conducting telephone interviews and
asking respondents to respond to a brief questionnaire. Neither the
telephone interviews nor respondents' responses to questionnaires
require any capital expenditure by respondents. Interviews solely
involve respondents making available one or more company officials for
approximately 1\1/2\ hours. The questionnaires ask respondents to
provide only information that they maintain within the ordinary and
usual course of their business. No additional cost burden is imposed on
respondents.
Debra A. Valentine,
General Counsel.
[FR Doc. 98-12661 Filed 5-12-98; 8:45 am]
BILLING CODE 6750-01-M