[Federal Register Volume 64, Number 164 (Wednesday, August 25, 1999)]
[Rules and Regulations]
[Pages 46267-46270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22015]
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FEDERAL TRADE COMMISSION
16 CFR Parts 2, 3 and 4
Rules of Practice Amendments
AGENCY: Federal Trade Commission (FTC).
ACTION: Final rules with request for comments.
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SUMMARY: To streamline the process of providing effective relief where
parties consent to the entry of a cease and desist order, the FTC is
amending its Rules of Practice to shorten the period for public comment
on consent settlements from 60 days to 30 days. The amended rules also
provide for more effective interim relief in cases involving mergers or
acquisitions, by providing that hold-separate or asset-
[[Page 46268]]
maintenance orders will be made immediately effective when the
Commission accepts the consent agreement or settlement proposal for
public comment.
DATES: These rule amendments are effective on August 25, 1999.
Agreements that have been executed by any or all respondents before the
effective date will not be affected by these amendments without the
consent of the parties.
Comments must be received on or before September 24, 1999.
ADDRESSES: Written comment on these rule revisions must be submitted in
20 copies to the Office of the Secretary, Room 159, Federal Trade
Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
Individuals filing comments need not submit multiple copies.
FOR FURTHER INFORMATION CONTACT: Christian S. White, Assistant General
Counsel for Legal Counsel, (202) 326-2476, Office of the General
Counsel, FTC, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION: The Commission considers it important to
solicit public comment on consent agreements. Nonetheless, the current
comment period of 60 days unduly delays implementation of consent
orders and the benefits to the public of addressing the conduct alleged
to be unlawful in the Commission's complaint. Neither the
Administrative Procedure Act, 5 U.S.C. 551, nor the FTC Act, 15 U.S.C.
41-58, requires agencies to offer a public comment period on
administrative settlements.1 Accordingly, the Commission has
decided to shorten the comment period to 30 days, as it was before
1974. The 30-day comment period will begin on the date the Commission
issues a press release announcing that the Commission has accepted the
agreement and placed it on the public record for comment. Press
releases are ordinarily posted on the Commission's Web site the day
they are released. The Commission believes that the shorter period
generally will be sufficient to allow thoughtful public comment. The
Commission may lengthen or shorten the 30-day comment period in the
public interest. The Commission also retains discretion to make an
order final after acceptance but before the comment period starts but
it contemplates doing so only in exceptional cases where, for example,
it believes that the allegedly unlawful conduct to be prohibited
threatens substantial and imminent public harm. If, in such cases, the
Commission, after the comment period, believes that modifications to
the order would be appropriate, it will (absent agreement by
respondents to the modifications) initiate a proceeding to reopen and
modify the order pursuant to Rule 3.72(b) or issue a new administrative
complaint to commence a new administrative proceeding in accordance
with Rule 3.11.
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\1\ Although public comment periods on consent agreements are
not required, the Commission has followed this practice for many
years. The Commission's procedure for considering administrative
consent orders has existed in one form or another since at least
1939. The procedure did not include a public comment period until
1967, when the Commission promulgated Rule 2.34, providing for a
comment period of 30 days. 32 FR 8448-49 (June 13, 1967). In 1974,
the Commission extended the comment period from 30 to 60 days. The
Commission added a companion provision, Rule 3.25, in 1975 to
establish an identical comment procedure for consent agreements in
Part 3 matters. 40 FR 15235-36 (April 4, 1975).
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With regard to competition cases involving planned mergers and
acquisitions, when staff negotiates a hold-separate or asset-
maintenance agreement, the Commission will issue the agreement as an
immediately effective order when it accepts the consent agreement for
comment. Although it is the Commission's view that hold-separate
agreements, as currently structured, are immediately enforceable,
treating such agreements as final Commission orders will make clear
that violations are punishable by civil penalties.2
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\2\ The amendment to Sec. 2.34 specifies that any hold-separate
or asset-maintenance orders will be accompanied by an administrative
complaint, but that the complaint will neither initiate an
adjudicatory proceeding nor trigger the application of the
prohibitions on ex parte communications in Sec. 4.7.
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These changes require amending Rules 2.32, 2.34 and 3.25. Technical
conforming changes also are being made to Rule 4.9 respecting the
Commission's public record. The Commission believes these amendments
will improve the protection of consumers and competition by
accelerating the effectiveness of Commission consent orders and by
increasing incentives to preserve the status quo pending final
resolution of planned and allegedly anticompetitive mergers and
acquisitions.
These rule revisions relate solely to agency practice and,
therefore, are not subject to the notice and comment requirements of
the Administrative Procedure Act, 5 U.S.C. 553(a)(2), or to the
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2). The
revisions do not involve the collection of information subject to the
Paperwork Reduction Act, 44 U.S.C. Chapter 35. Although the revisions
are effective as stated in the previous section, the Commission
welcomes comment on them and will consider further revision as
appropriate.
List of Subjects
16 CFR Part 2
Administrative practice and procedure, Consent agreements,
Investigations.
16 CFR Part 3
Administrative practice and procedure, Consent agreements.
16 CFR Part 4
Administrative practice and procedure, Public record.
For the reasons set forth in the preamble, the Federal Trade
Commission amends title 16, chapter I, subchapter A, of the Code of
Federal Regulations as follows:
PART 2--NONADJUDICATIVE PROCEDURES
1. Revise the authority citation for part 2 to read:
Authority: 15 U.S.C. 46.
Subpart C--Consent Order Procedure
2. Revise Sec. 2.32 to read as follows:
Sec. 2.32 Agreement.
Every agreement in settlement of a Commission complaint shall
contain, in addition to an appropriate proposed order, either an
admission of the proposed findings of fact and conclusions of law
submitted simultaneously by the Commission's staff or an admission of
all jurisdictional facts and an express waiver of the requirement that
the Commission's decision contain a statement of findings of fact and
conclusions of law. Every agreement also shall waive further procedural
steps and all rights to seek judicial review or otherwise to challenge
or contest the validity of the order. In addition, where appropriate,
every agreement in settlement of a Commission complaint challenging the
lawfulness of a proposed merger or acquisition shall also contain a
hold-separate or asset-maintenance order. The agreement may state that
the signing thereof is for settlement purposes only and does not
constitute an admission by any party that the law has been violated as
alleged in the complaint. Every agreement shall provide that:
(a) The complaint may be used in construing the terms of the order;
(b) No agreement, understanding, representation, or interpretation
not
[[Page 46269]]
contained in the order or the aforementioned agreement may be used to
vary or to contradict the terms of the order;
(c) The order will have the same force and effect and may be
altered, modified or set aside in the same manner provided by statute
for Commission orders issued on a litigated or stipulated record;
(d) Except as provided by order of the Commission, any order issued
pursuant to the agreement will become final upon service;
(e) The agreement will not become a part of the public record
unless and until it is accepted by the Commission; and
(f) If the Commission accepts the agreement, further proceedings
will be governed by Sec. 2.34.
3. Revise Sec. 2.34 to read as follows:
Sec. 2.34 Disposition.
(a) Acceptance of proposed consent agreement. The Commission may
accept or refuse to accept a proposed consent agreement. Except as
otherwise provided in paragraph (c) of this section, acceptance does
not constitute final approval, but it serves as the basis for further
actions leading to final disposition of the matter.
(b) Effectiveness of hold-separate or asset-maintenance order.
Following acceptance of a consent agreement, the Commission will, if it
deems a hold-separate or asset-maintenance order appropriate, issue a
complaint and such an order as agreed to by the parties. Such order
will be final upon service. The issuance of a complaint under this
paragraph will neither commence an adjudicatory proceeding subject to
part 3 of this chapter nor subject the consent agreement proceeding to
the prohibitions specified in Sec. 4.7 of this chapter.
(c) Public comment. Promptly after its acceptance of the consent
agreement, the Commission will place the order contained in the consent
agreement, the complaint, and the consent agreement on the public
record for a period of 30 days, or such other period as the Commission
may specify, for the receipt of comments or views from any interested
person. At the same time, the Commission will place on the public
record an explanation of the provisions of the order and the relief to
be obtained thereby and any other information that it believes may help
interested persons understand the order. The Commission also will
publish the explanation in the Federal Register. The Commission retains
the discretion to issue a complaint and a Final Decision and Order,
incorporating the order contained in a consent agreement, in
appropriate cases before seeking public comment. Unless directed
otherwise by the Commission, such Decision and Order will be final upon
service.
(d) Comment on initial compliance report. If respondents have filed
an initial report of compliance pursuant to Sec. 2.33, the Commission
will place that report on the public record, except for portions, if
any, granted confidential treatment pursuant to Sec. 4.9(c) of this
chapter, with the complaint, the order, and the consent agreement.
(e) Action following comment period. (1) Following the comment
period, on the basis of comments received or otherwise, the Commission
may either withdraw its acceptance of the agreement and so notify
respondents, in which event it will take such other action as it may
consider appropriate, or issue and serve its complaint in such form as
the circumstances may require and its decision in disposition of the
proceeding.
(2) The Commission, following the comment period, may determine, on
the basis of the comments or otherwise, that a Final Decision and Order
that was issued in advance of the comment period should be modified.
Absent agreement by respondents to the modifications, the Commission
may initiate a proceeding to reopen and modify the decision and order
in accordance with Sec. 3.72(b) of this chapter or commence a new
administrative proceeding by issuing a complaint in accordance with
Sec. 3.11 of this chapter.
PART 3--RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS
4. Revise the authority citation for part 3 to read as follows:
Authority: 15 U.S.C. 46, unless otherwise noted.
Subpart C--Prehearing Procedures; Motions; Interlocutory Appeals;
Summary Decisions
5. Amend Sec. 3.25 by revising paragraph (f) to read as follows:
Sec. 3.25 Consent agreement settlements.
* * * * *
(f) After some or all of allegations in a matter have been
withdrawn from adjudication, the Commission may accept the proposed
consent agreement, reject it and return the matter or affected portions
thereof to adjudication for further proceedings or take such other
action as it may deem appropriate. If the agreement is accepted, it
will be disposed of as provided in Sec. 2.34 of this chapter, except
that if, following the public comment period provided for in Sec. 2.34,
the Commission decides, based on comments received or otherwise, to
withdraw its acceptance of such an agreement, it will so notify the
parties and will return to adjudication any portions of the matter
previously withdrawn from adjudication for further proceedings or take
such other action it considers appropriate.
* * * * *
PART 4--MISCELLANEOUS RULES
6. Revise the authority citation for part 4 to read as follows:
Authority: 15 U.S.C. 46, unless otherwise noted.
7. Amend Sec. 4.9 by revising paragraph (b)(6) to read as follows:
Sec. 4.9 The public record.
* * * * *
(b) * * *
(6) Consent Agreements (16 CFR 2.31 through 2.34, 3.25). (i)
Agreements containing orders, after acceptance by the Commission
pursuant to Secs. 2.34 and 3.25(f) of this chapter;
(ii) Comments and other materials filed or placed on the public
record under Secs. 2.34 and 3.25(f) concerning proposed consent
agreements and related orders; and
(iii) Decisions and orders issued and served under Secs. 2.34 and
3.25(f), including separate statements of Commissioners.
* * * * *
By direction of the Commission.
Donald S. Clark,
Secretary.
Statement of Commissioner Orson Swindle Concerning Amendments to
Commission Rules 2.32, 2.34, 3.25, and 4.9
I have voted for the amendments to the Commission's Rules of
Practice that would shorten the public comment period on consent
agreements and would make hold-separate and asset-maintenance
agreements immediately effective. In my judgment, shortening the
comment period to 30 days achieves a sensible balance between
forestalling violations of Commission orders and affording the
public sufficient time to comment on Commission settlements. I also
see obvious benefits from issuing hold-separate and asset-
maintenance agreements as immediately enforceable orders.
Nevertheless, I would have preferred to subject these rule
revisions to advance public comment, rather than--as the Commission
has done--issuing them as final rules with a request for comments
after the fact. Whatever my judgment (and that of my colleagues)
concerning whether the revisions are prudent and in the public
interest, I would have thought we would also try to appraise the
judgment of the public--those for whom we in government work, and to
whom we are ultimately accountable--before issuing a
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final rule that halves the comment period on consent
agreements.1
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\1\ The Administrative Procedure Act (``APA'') generally
requires that agencies engage in notice-and-comment procedures
before issuing a final rule, 5 U.S.C. 553(c), but rules of agency
procedure or practice are exempt from this requirement. 5 U.S.C.
553(b)(A). Nevertheless, ``[a]lthough the APA provides this
exemption for rules of agency procedure or practice, agency
rulemakers should consider providing notice and an opportunity for
comment where possible if the rules will affect the public.''
Administrative Conference of the United States, A Guide to Federal
Agency Rulemaking 51 (2d ed. 1991) (emphasis added); see also
American Bar Ass'n, Government and Public Sector Lawyers Division
and Section of Administrative Law and Regulatory Practice, A Guide
to Federal Agency Rulemaking 54-55 (3d ed. 1998). Although I do not
believe that the Commission must put every change in its procedural
rules out for public comment, doing so is warranted here because the
proposed change may significantly affect the public.
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One might respond to my concern with the argument that since the
public comment period itself is for the benefit of the Commission
and not of the public, any decision to shorten or eliminate the
period should be in the hands of the sole beneficiary of the public
comment mechanism--the Commission. To argue thus, however, would be
to disregard a core element of our system of government: the
public's stake in the decisions reached by government agencies, and
our responsibility to take the public's views into account. Although
I would not have voted to shorten the comment period to 30 days if I
believed that such an action would nullify the public's role,
getting public comment beforehand on this very issue would have been
valuable.
Instead, the Commission has decided to allow 30 days for public
comment after these final rules have been published in the Federal
Register. I fear that this is not an adequate surrogate for the
advance comment that we should have solicited. Once something such
as an order or a rule revision is issued ``in final,'' it is often a
fait accompli that is unlikely to be undone even in the face of
inexorable logic.2 We should have invited public
participation before taking these steps.
\2\ The courts have recognized that seeking comment after making
a rule change is not usually a substitute for obtaining comment
before such a change is made: ``[A]n agency is not likely to be
receptive to suggested changes once the agency ``put[s] its
credibility on the line in the form of ``final'' rules. People
naturally tend to be more close-minded and defensive once they have
made a ``final'' determination.'''' Air Transport Ass'n of America
v. Dept. of Transp., 900 F.2d 369, 379 (D.C. Cir. 1990) (quoting
National Tour Brokers Ass'n v. United States, 591 F.2d 896, 902
(D.C. Cir. 1978)), cert. denied, 498 U.S. 1023 (1991).
[FR Doc. 99-22015 Filed 8-24-99; 8:45 am]
BILLING CODE 6750-01-P