[Federal Register Volume 65, Number 162 (Monday, August 21, 2000)]
[Rules and Regulations]
[Pages 50636-50638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21185]


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FEDERAL TRADE COMMISSION

16 CFR Part 2


Requests To Reopen

AGENCY: Federal Trade Commission (FTC).

ACTION: Final rule.

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SUMMARY: The FTC is amending its Rule of Practice 2.51(b), which 
governs requests to reopen a Commission decision containing an order 
that has become effective. The amendment clarifies the ``satisfactory 
showing'' that a requester must make to support a request that the 
Commission reopen the proceeding to determine whether the order should 
be modified on public interest grounds.

DATES: This amendment is effective on August 21, 2000.

FOR FURTHER INFORMATION CONTACT: Alex Tang, Attorney, Office of the 
General Counsel, FTC, 600 Pennsylvania Ave., NW., Washington, DC 20580; 
202-326-2447.

SUPPLEMENTARY INFORMATION: FTC Rule of Practice 2.51(b), 16 CFR 
2.51(b), sets forth certain requirements for requests to reopen and 
modify Commission orders either because of ``changed conditions of law 
or fact'' or on the ground that ``the public interest so requires.'' As 
presently drafted, the Rule could be read to require that all requests 
be accompanied by affidavits ``demonstrating in detail the nature of 
the changed conditions,'' even if the request itself is based on the 
``public interest.'' If there are no changed conditions, however, such 
a requirement is unnecessary.
    Accordingly, the Commission is amending the second sentence of Rule 
2.51(b) to make clear that changed conditions must be demonstrated only 
when the request alleges that changes in fact or law warrant reopening 
and modification.\1\ In the case of ``public interest'' requests, the 
Rule continues to require that such a request be supported by a factual 
affidavit, as described in further detail below, explaining why the 
Commission should reopen and modify the order in the public interest. A 
showing of changed conditions would be permitted but not mandated.
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    \1\ The amended sentence is redesignated as Rule 2.51(b)(1), and 
the remaining subsequent sentences of Rule 2.51(b), which are not 
amended, are redesignated as Rule 2.51(b)(2).
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    The amendment does not alter the requirement in the first sentence 
of Rule 2.51(b) that a requester make a ``satisfactory showing'' of 
``changed conditions of law or fact'' or the ``public interest'' in 
support of its request. While the FTC Act expressly requires a 
``satisfactory showing'' of changed conditions of law or fact before 
the Commission is required to reopen an order on those grounds, the Act 
does not specify the threshold showing needed to reopen a Commission 
order on general ``public interest'' grounds. See FTC Act Sec. 5(b), 15 
U.S.C. 45(b). Nonetheless, when the Commission incorporated the 
``satisfactory showing'' requirement of section 5(b) into Rule 2.51, 
the Commission extended the requirement to all requests filed under the 
Rule, including ``public interest'' requests.\2\ In a subsequent letter 
ruling, the Commission, without referring to the existing language of 
the statute or the Rule, further stated that a request to reopen and 
modify an order in the ``public interest'' must make a threshold 
showing of ``affirmative need.'' \3\ Some have interpreted that showing 
of need as a narrow showing of the requester's need for relief from 
competitive burdens imposed by the order.\4\
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    \2\ See 45 FR 36338, 36339 (May 29, 1980) (amending Rule 2.51); 
e.g., Glendinning Cos., 97 F.T.C. 163 (1981); Coca-Cola Co., 97 
F.T.C. 927 (1981); National Dairy Prods. Ass'n, 100 F.T.C. 431 
(1982); Hammermill Paper Co., 100 F.T.C. 454 (1982); Morton Thiokol, 
Inc., 101 F.T.C. 353 (1983); Illinois Cent. Indus., Inc., 101 F.T.C. 
409 (1983).
    \3\ See Letter to Joel Hoffman, Damon Corp., Docket No. C-3916 
(Mar. 29, 1983), reprinted in [1979-1983 Transfer Binder] Trade Reg. 
Rep. (CCH) para. 22,207. In that letter, the Commission stated: ``As 
a threshold matter, [to reopen an order on public interest grounds] 
under [s]ection 5(b) and Commission Rule 2.51[,] a requester must 
demonstrate some affirmative need to modify the original order. Once 
such a showing of need has been made, the Commission will balance 
the reasons favoring the modification requested against any reasons 
not to make that modification.'' Letter at 2. The letter states that 
this approach was modeled on the two-step analysis used by courts in 
modifying final court orders, where a requester must present reasons 
that ``justify modification'' as a ``threshold matter.'' Id. at 2 
n.1 (quoting Gautreaux v. Pierce, 535 F. Supp. 423, 426 (N.D. Ill. 
1982)).
    \4\ See, e.g., Concurring Statement of Comm'r Starek, Columbia/
HCA Healthcare Corp., 121 F.T.C. 611, 615 (1996); Concurring 
Statement of Comm'r Starek, California & Hawaiian Sugar Co., 119 
F.T.C. 39, 51-52 (1995); Dissenting Statement of Comm'r Azcuenaga, 
Service Corp. Int'l, 117 F.T.C. 700, 718 (1994). Nothing in the 
Commission's letter ruling in Damon, however, suggested or was 
intended to indicate that a showing of competitive injury is the 
only way to demonstrate ``affirmative need.''

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[[Page 50637]]

    Over time, however, the Commission has recognized that there can be 
threshold ``public interest'' reasons not necessarily related to the 
requester's competitive needs or interests to reopen an order for 
purposes of possibly modifying it. For example, in some cases, it may 
be in the ``public interest'' for the Commission to reopen an order if 
modifying it would likely achieve the intended purposes of an order 
more efficiently or effectively, and would not merely serve to lessen 
the burdens of the order on the requester.\5\ Alternatively, there may 
be a threshold ``public interest'' reason to reopen and consider 
modifying an order if, in the absence of changed conditions, its 
purposes have nonetheless already been achieved, or are not likely to 
be achieved, under the existing order.\6\ In still other cases, a 
showing of how non-parties to the order would benefit or avoid harm if 
the order were modified may provide a threshold ``public interest'' 
reason to reopen it.\7\
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    \5\ See, e.g., Promodes, S.A., 116 F.T.C. 377, 383 (1993) 
(affirmative need to reopen shown where proposed substitute 
divestiture would produce viable independent competitor, while 
existing divestiture provision, if enforced, would harm 
competition); cf., e.g., Columbia/HCA, 124 F.T.C. 38, 49 (1997) 
(concurring statement of Comm'r Starek, noting that a mutual mistake 
of fact underlying the order justified its reopening and 
modification); American Med. Ass'n, 114 F.T.C. 575, 580-81 (1991) 
(order reopened and modified to expand the reach of the order, 
further competition, and foster self-regulation); Mattel, Inc., 104 
F.T.C. 555, 557 (1984) (order reopened and modified to clarify order 
requirements); Procter & Gamble Co., 103 F.T.C. 51, 53 (1984) (order 
reopened and modified to tailor disclosure requirements to their 
intended purpose).
    \6\ See, e.g., Cooper Indus., 124 F.T.C. 602, 605-06 (1997) 
(affirmative need to reopen the order demonstrated by futility and 
cost of continuing to require that license be made available in 
absence of a likely buyer); T&N plc, 114 F.T.C. 696, 699 (1991) 
(affirmative need to reopen the order demonstrated by fact that 
goals of divestiture had been achieved and that requiring further 
divestitures would impede competition); cf. Columbia/HCA, 124 F.T.C. 
at 42 (order reopened and modified where divestiture requirement 
imposed costs unnecessary to achieve the order's remedial purposes); 
Liquid Air Corp., 111 F.T.C. 135, 137 (1988) (order reopened and 
modified to delete prior approval provision that pertained to wholly 
internal corporate activities and served no procompetitive purpose); 
Chevron Corp., 105 F.T.C. 228, 229 (1985) (order reopened and 
modified to delete hold separate agreement that had already 
accomplished its primary objective).
    \7\ See, e.g., Institut Merieux, S.A., 117 F.T.C. 473, 481 
(1994) (affirmative need to reopen order shown by costly leasing 
requirements that ``may adversely affect public health needs'' by 
delaying or preventing rabies vaccine from reaching the market); cf. 
Schnuck Markets, Docket No. C-3585 (June 2, 1998), slip op. at 3 
(order reopened and modified to permit transfer of languishing 
assets to a charitable organization).
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    Accordingly, the Commission concludes that it is not necessary or 
appropriate to continue using the phrase ``affirmative need'' when 
discussing the threshold showing required for requests to reopen orders 
to consider whether they should be modified or set aside in the 
``public interest.'' Instead, the Commission finds it sufficient to 
rely upon the language of Rule 2.51, which requires an initial 
``satisfactory showing'' of how modification would serve the public 
interest before the Commission determines whether to reopen an order 
and consider all of the reasons for and against its modification. The 
term ``satisfactory showing,'' as opposed to ``affirmative need,'' 
better accommodates and acknowledges the range of threshold public 
interest considerations that the Commission may take into account under 
the ``public interest'' standard. In discontinuing reliance on the term 
``affirmative need,'' the Commission hopes to dispel any lingering 
misconceptions or questions that may surround that particular 
formulation of the threshold requirement.
    Thus, under the Rule, a ``satisfactory showing'' requires, with 
respect to ``public interest'' requests, that the requester make a 
prima facie showing of a legitimate ``public interest'' reason or 
reasons justifying relief. As explained earlier, this showing requires 
the requester to demonstrate, for example, that there is a more 
effective or efficient way of achieving the purposes of the order, that 
the order in whole or part is no longer needed, or that there is some 
other clear public interest that would be served if the Commission were 
to grant the requested relief.\8\ In addition, this showing must be 
supported by evidence that is credible and reliable.\9\
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    \8\ Thus, a requester's mere assertion of competitive injury or 
disadvantage will ordinarily not constitute a ``satisfactory 
showing'' where the requester is unable to demonstrate how the 
proposed modification would promote effective competition or 
otherwise serve the broader public interest. See, e.g., California & 
Hawaiian Sugar, 119 F.T.C. at 44-45 (a requester cannot avoid order 
obligations just because its competitors are not so restricted; 
order was reopened and modified, however, to allow limited 
comparative claims that encouraged competition by enabling consumers 
to distinguish and choose among otherwise fungible products).
    \9\ As explained in a prior amendment to the Rule, ``[r]equests 
to reopen orders must not only allege facts that, if true, would 
constitute the necessary showing, but must also credibly demonstrate 
that the factual assertions are reliable. [The Rule] therefore 
specifically requires that requesters provide one or more affidavits 
to support facts alleged in requests to reopen and modify orders. 
This [requirement] will not only help the Commission in its decision 
making process but, by clarifying the applicable standard, aid 
requesters in presenting meritorious cases. * * * This [requirement] 
specifies the procedural method for substantiating factual 
assertions.'' 53 FR 40867 (Oct. 19, 1988).
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    If, after determining that the requester has made the required 
showing, the Commission decides to reopen the order, the Commission 
will then consider and balance all of the reasons for and against 
modification. In no instance does a decision to reopen an order oblige 
the Commission to modify it,\10\ and the burden remains on the 
requester in all cases to demonstrate why the order should be reopened 
and modified.\11\
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    \10\ See Louisiana-Pacific Corp., 967 F.2d 1372, 1376-77 (9th 
Cir. 1992) (reopening and modification are independent 
determinations).
    \11\ The burden is a heavy one in view of the public interest in 
repose and finality of Commission orders. See Service Corp. Int'l, 
117 F.T.C. at 702 (citing legislative history of section 5(b) 
regarding the showing required to reopen an order, and also citing 
Federated Dep't Stores, Inc. v. Moitie, 421 U.S. 394 (1981)); RSR 
Corp. v. FTC, 656 F.2d 718, 721 (D.C. Cir. 1981) (upholding denial 
of reopening request and noting that courts have consistently 
subscribed to the rule that agencies are not required to reopen 
except in the most ``extraordinary circumstances''). Maintaining the 
integrity of the Commission's orders is not merely a matter of the 
agency's administrative convenience: it also serves the public 
interest by ensuring that purchasing, marketing, and other 
competitive, strategic or consumer decisions can be made against a 
relatively stable and predictable background of applicable law and 
rules.
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    This Rule amendment is exempt from the notice-and-comment 
requirements of the Administrative Procedure Act as a rule of ``agency 
organization, procedure, or practice.'' 5 U.S.C. 553(b)(A). The 
amendment does not entail an information collection for purposes of the 
Paperwork Reduction Act, 44 U.S.C. 3501 et seq., and is not subject to 
the requirements of the Regulatory Flexibility Act, 5 U.S.C. 605(b).

List of Subjects in 16 CFR Part 2

    Administrative practice and procedure, Reporting and recordkeeping 
requirements.

    Accordingly, for the reasons set out in the preamble, the Federal 
Trade Commission amends Title 16, Chapter 1, Subchapter A, of the Code 
of Federal Regulations as follows:

PART 2--NON-ADJUDICATIVE PROCEDURES

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

    Authority: 15 U.S.C. 46.

    2. Amend Sec. 2.51 by revising paragraph (b) to read as follows:


Sec. 2.51  Requests to reopen.

* * * * *
    (b) Contents. A request under this section shall contain a 
satisfactory showing that changed conditions of law or fact require the 
rule or order to be altered, modified or set aside, in whole

[[Page 50638]]

or in part, or that the public interest so requires.
    (1) This requirement shall not be deemed satisfied if a request is 
merely conclusory or otherwise fails to set forth by affidavit(s) 
specific facts demonstrating in detail:
    (i) The nature of the changed conditions and the reasons why they 
require the requested modifications of the rule or order; or
    (ii) The reasons why the public interest would be served by the 
modification.
    (2) Each affidavit shall set forth facts that would be admissible 
in evidence and shall show that the affiant is competent to testify to 
the matters stated therein. All information and material that the 
requester wishes the Commission to consider shall be contained in the 
request at the time of filing.
* * * * *

By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-21185 Filed 8-18-00; 8:45 am]
BILLING CODE 6750-01-P