[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Notices]
[Pages 67254-67255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31885]


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FEDERAL TRADE COMMISSION


 Remedial Use of Disgorgement

AGENCY: Federal Trade Commission (FTC or Commission).

ACTION: Notice; request for comments.

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SUMMARY: The Commission is requesting comments on the use of 
disgorgement as a remedy for violations of the Hart-Scott-Rodino (HSR) 
Act, FTC Act and Clayton Act.

DATES: Comments must be received by March 1, 2002.

ADDRESSES: Public comments are invited, and may be filed with the 
Commission in either paper or electronic form. An original and one (1) 
copy of any comments filed in paper form should be submitted to the 
Document Processing Section, Office of the Secretary, Room 159-H, 
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 
20580. If a comment contains nonpublic information, it must be filed in 
paper form, and the first page of the document must be clearly labeled 
``confidential.'' Comments that do not contain any nonpublic 
information may instead be filed in electronic form (in ASCII format, 
WordPerfect, or Microsoft Word) as part of or as an attachment to email 
messages directed to the following email box: 
[email protected].

FOR FURTHER INFORMATION CONTACT: John Graubert, Office of General 
Counsel, FTC, 600 Pennsylvania Avenue, NW., Washington, DC 20580, (202) 
326-2186, [email protected].

SUPPLEMENTARY INFORMATION: The Commission has considerable experience 
with the use of monetary equitable remedies in consumer protection 
cases. In contract, the Commission has considered disgorgement or other 
forms of monetary equitable relief in fewer competition matters and 
obtained disgorgement in two recent matters, FTC v. Mylan Laboratories, 
et al. and FTC v. The Hearst Trust et al. The Commission accordingly 
solicits comments on the factors the Commission should consider in 
applying this remedy and how disgorgement should be calculated. The 
Commission is not re-examining its statutory authority to seek 
disgorgement or other monetary equitable relief in competition cases.
    Comments may address any or all of the following questions. 
However, other, related comments are also welcome:
    1. Are there particular violations of the Clayton Act, the HSR Act, 
the competition provisions of the FTC Act, or final orders of the 
Commission in competition cases where disgorgement would be especially 
appropriate or, in contrast, less useful? Should the resort to 
disgorgement depend on whether, in conjunction with an HSR Act 
violation or order violation, the underlying transaction or conduct 
constitutes an illegal acquisition under section 7 of the Clayton Act, 
or constitutes monopolization or attempted monopolization under section 
5 of the Federal Trade Commission Act?
    2. How should the Commission calculate the amount of disgorgement 
appropriate for particular law violations under each of the statutes? 
For example, if the Commission sought disgorgement for violations of 
the HSR Act, how should disgorgement be calculated when the unlawful 
gain includes (or consists solely of) tax savings, stock market 
profits, or other gain not directly related to antitrust injury? Should 
disgorgement be calculated to remove all profits earned from the 
acquisition, all profits attributable to antitrust harm, or some other 
approach? How should the Commission assess benefits obtained in an 
unlawful acquisition, or other transaction, that do not flow directly 
from immediate injury to customers, e.g., where the violator reduces 
its investments in future technology because of a reduction in the 
competition it faces? Is the approach used to calculate disgorgement in 
S.E.C. v. First City Financial Corporation, Ltd., 890 F.2d 1215 (D.C. 
Cir. 1989), appropriate for the Commission's use?
    3. What other factors should the Commission consider in determining 
whether to seek disgorgement? How should the Commission weight and what 
is the relevance to the Commission of the following factors in 
determining whether to seek disgorgement: (i) The impact that seeking 
such a remedy may have on other aspects of any settlement negotiations, 
e.g., delay in obtaining divestiture or other structural relief; (ii) 
the adequacy of other forms of relief (including civil penalties); 
(iii) the egregiousness of the conduct at issue; (iv) the extent of 
harm to the market generally or to indirect purchasers who may be 
unable to pursue a claim; (v) the ability of an affected party to 
secure relief independently of the Commission, e.g., by private 
actions; (vi) the advantages or disadvantages of litigation in federal 
court rather than in an administrative proceeding; and (vii) the 
possible tradeoff between addressing past harm more thoroughly (through 
disgorgement) and an interest in obtaining relief quickly (through a 
conduct or structural remedy) so as to limit the effects of a 
continuing violation?
    4. Should pending or potential private litigation, actions by state 
attorneys general, or civil or criminal prosecution by the Antitrust 
Division of the Department of Justice, affect the Commission's decision 
to seek disgorgement? Is this decision any different from the 
Commission's decision to seek other equitable relief, e.g., 
divestiture, in cases where other related private or public litigation 
exists or its possible? Will Commission disgorgement claims encourage 
or discourage the decision of private parties or states to bring or 
continue litigation, or settlement negotiations, in such cases? If so, 
what would the ultimate effect on consumer welfare be under each such 
scenario?
    5. In light of the fact that disgorgement and restitution have 
distinct theoretical underpinnings and equitable rationales, are there 
circumstances in competition cases in which one or the other of these 
remedies is more appropriate? What are the considerations that should 
inform such decisions?
    6. When and how should disgorgement funds recovered by the 
Commission be distributed as restitution when there is parallel private 
litigation? For example, should any recovery of disgorgement or 
restitution by the Commission affect the calculation of or be used to 
pay attorney's fees in parallel litigation, and, if so, in what way? In 
any restitution program, how should direct and indirect purchasers be 
treated? How should the Commission proceed if its own action and 
parallel private action are not consolidated before a single judge?
    The Commission is also interested in learning about parties' 
experiences in analogous circumstances involving disgorgement with 
other federal or state agencies and in other enforcement areas.

    By direction of the Commission.


[[Page 67255]]


    Dated: December 19, 2001.
Donald S. Clark,
Secretary.
[FR Doc. 01-31885 Filed 12-27-01; 8:45 am]
BILLING CODE 6750-01-M