[Federal Register Volume 77, Number 152 (Tuesday, August 7, 2012)]
[Notices]
[Pages 47070-47072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-19185]


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FEDERAL TRADE COMMISSION


Withdrawal of the Commission Policy Statement on Monetary 
Equitable Remedies in Competition Cases

AGENCY: Federal Trade Commission.

ACTION: Notice of withdrawal of Commission policy statement.

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SUMMARY: In 2003 the Federal Trade Commission issued a Policy Statement 
on Monetary Remedies in Competition Cases. The Commission has now 
withdrawn the Policy Statement.

DATES: Effective Date: July 31, 2012.

FOR FURTHER INFORMATION CONTACT: Mark Seidman, Attorney, Bureau of 
Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW., 
Washington, DC 20580, 202-326-3296

SUPPLEMENTARY INFORMATION:

Statement of the Commission, Effecting the Withdrawal of the 
Commission's Policy Statement on Monetary Equitable Remedies in 
Competition Cases (July 31, 2012)

    In 2003, the Federal Trade Commission issued the Policy Statement 
on Monetary Remedies in Competition Cases (``Policy Statement''),\1\ 
which outlined an analytical framework to guide Commission 
determination of appropriate circumstances for the use of monetary 
equitable remedies in federal court. Although intended to clarify past 
Commission views on this topic, the practical effect of the Policy 
Statement was to create an overly restrictive view of the Commission's 
options for equitable remedies.\2\ Accordingly, the Commission 
withdraws the Policy Statement and will rely instead upon existing law, 
which provides sufficient guidance on the use of monetary equitable 
remedies.
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    \1\ Fed. Trade Comm'n, Policy Statement on Monetary Equitable 
Remedies in Competition Cases, 68 FR 45,820 (Aug. 4, 2003) 
[hereinafter ``Policy Statement''].
    \2\ Although footnote 4 of the Policy Statement notes that 
``[i]t does not create any right or obligation, impose any element 
of proof, or adjust the burden of proof or production of evidence on 
any particular issue, as those standards have been established by 
the courts,'' we are concerned that parties could mistakenly argue 
that the factors laid out in the Policy Statement are binding on the 
Commission, thus creating an unnecessary side issue in litigation. 
Id. at n.4.
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    As past cases demonstrate, disgorgement and restitution can be 
effective remedies in competition matters, both to deprive wrongdoers 
of unjust enrichment and to restore their victims to the positions they 
would have occupied but for the illegal behavior. Because the ordinary 
purpose and effect of anticompetitive conduct is to enrich wrongdoers 
at the expense of consumers, competition cases may often be appropriate 
candidates for monetary equitable relief. Although our decisions and 
orders generally focus on structural

[[Page 47071]]

or behavioral remedies intended to curb future competitive harm, the 
agency's mission to protect consumers and competition also includes, 
where appropriate, taking action to remedy the actual, realized effects 
of antitrust violations. The policy of depriving wrongdoers of the 
fruits of their misconduct is evident in the Commission's consumer 
protection work, where the Commission regularly seeks and attains 
monetary remedies. Accordingly, while disgorgement and restitution are 
not appropriate in all cases, we do not believe they should apply only 
in ``exceptional cases,'' as previously set out in the Policy 
Statement.\3\
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    \3\ Id. at 45,821 (``In general, we will continue to rely 
primarily on more familiar, prospective remedies, and seek 
disgorgement and restitution in exceptional cases.'').
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    The Policy Statement provided three factors for the Commission to 
consider in potential disgorgement (or, to some extent, restitution) 
cases: (1) Whether the underlying violation is ``clear''; \4\ (2) 
whether there is a reasonable basis to calculate the remedial payment; 
and (3) whether remedies in other civil or criminal litigation are 
likely to accomplish fully the purposes of the antitrust laws. While 
the second factor does no more than restate existing legal standards, 
the other two factors may impose constraints on the Commission beyond 
the requirements of the law.
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    \4\ This factor did not apply to restitution.
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    As to the first factor, rarity or clarity of the violation is not 
an element considered by the courts in disgorgement requests.\5\ 
Indeed, some have erroneously interpreted the clarity factor to mean 
that disgorgement should not be sought in cases of first impression. 
Whether conduct is common or novel, clearly a violation or never before 
considered, has little to do with whether the conduct is 
anticompetitive; some novel conduct can violate the antitrust laws and 
can be even more egregious than ``clear'' violations. Moreover, a 
notice requirement may be understood to suggest that disgorgement is a 
punitive tool akin to fines or imprisonment. It is not. Rather, it is 
designed, when used in conjunction with other forms of equitable 
relief, to return the market to the condition that existed before the 
violation occurred, and to ensure that the party that engaged in the 
anticompetitive conduct does not retain the profits derived from that 
conduct. We therefore do not see a basis for creating a heightened 
standard for disgorgement in cases brought under the federal antitrust 
statutes.\6\
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    \5\ See, e.g., United States v. KeySpan Corp., 763 F. Supp. 2d 
633, 638-42 (S.D.N.Y. 2011) (supporting the Department of Justice's 
settlement of Sherman Act claims with disgorgement); Fed. Trade 
Comm'n v. Mylan Laboratories, 62 F. Supp. 2d 25, 36-37 (D.D.C. 1999) 
(upholding the FTC's ability to require disgorgement in a 
competition case). We note that the Department of Justice is not 
subject to the heightened standards articulated by the Commission in 
the Policy Statement.
    \6\ In addition to violating the federal antitrust statutes, 
anticompetitive conduct generally--and novel conduct in particular--
may at times constitute a stand-alone violation of Section 5 of the 
FTC Act. The scope of the Commission's Section 5 enforcement 
authority is inherently broader than the antitrust laws, in keeping 
with Congressional intent to create an agency that would couple 
expansive jurisdiction with more limited and, typically, forward-
looking remedies. We do not intend to use monetary equitable 
remedies in stand-alone Section 5 matters.
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    The third factor also may place an undue burden on the Commission. 
Specifically, the Policy Statement provides that the Commission will 
consider whether ``other remedies are likely to fail to accomplish 
fully the purposes of the antitrust laws[.]'' \7\ That language may be 
read to require that the Commission demonstrate the insufficiency of 
other actions to secure monetary equitable remedies. If misinterpreted 
in that manner, such a burden is inappropriate. The question of whether 
there are alternative plaintiffs that may seek or are seeking monetary 
relief is relevant in this context, but it is not dispositive. It is 
only one of several questions that might usefully be asked in deciding 
whether a Commission imposed monetary remedy is appropriate and 
necessary.
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    \7\ Policy Statement, 68 FR at 45,822.
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    It has been our experience that the Policy Statement has chilled 
the pursuit of monetary remedies in the years since the statement's 
issuance. At a time when Supreme Court jurisprudence has increased 
burdens on plaintiffs, and legal thinking has begun to encourage 
greater seeking of disgorgement,\8\ the FTC has sought monetary 
equitable remedies in only two competition cases since we issued the 
Policy Statement in 2003.\9\ Although many of the issues explored in 
the Policy Statement will continue to inform our future consideration 
of the use of monetary equitable remedies, we withdraw the Policy 
Statement to clarify that the Commission will assess the use of those 
remedies on the basis of relevant law. Existing case law suffices to 
guide our use of disgorgement and restitution remedies, and we will 
evaluate the unique circumstances of each case through that framework.
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    \8\ See, e.g., Einer Elhauge, Disgorgement as an Antitrust 
Remedy, 76 ANTITRUST L.J. 79 (2009).
    \9\ Fed. Trade Comm'n v. Perrigo Co., No. 1:04CV1397 (D.D.C. 
Aug. 12, 2004); Fed. Trade Comm'n v. Lundbeck, Inc., No. 08-6379, 
2010 WL 3810015 (D. Minn. Aug. 31, 2010).
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    As always, the Commission will exercise responsibly its 
prosecutorial discretion in determining which cases are appropriate for 
disgorgement. The Commission regards disgorgement as one of many 
remedial solutions at its disposal in competition cases, and will 
employ it accordingly to protect consumers and promote competition.

    By direction of the Commission, Commissioner Ohlhausen 
dissenting.
Donald S. Clark,
Secretary.

Statement of Commissioner Maureen K. Ohlhausen, Dissenting From the 
Commission's Decision To Withdraw Its Policy Statement on Monetary 
Equitable Remedies in Competition Cases (July 31, 2012)

    I dissent from the majority's decision to withdraw the Commission's 
2003 Policy Statement on Monetary Equitable Remedies in Competition 
Cases (``Policy Statement'').\1\
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    \1\ Fed. Trade Comm'n, Policy Statement on Monetary Equitable 
Remedies in Competition Cases, 68 FR 45,820 (Aug. 4, 2003).
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    The Policy Statement had a strong pedigree. It was issued in 2003 
through a 5-0 bipartisan vote.\2\ The Policy Statement subsequently 
received a unanimous endorsement by the Antitrust Modernization 
Commission (``AMC''), which concluded in 2007 that ``[t]here is no need 
to clarify, expand, or limit the agencies' authority to seek monetary 
equitable relief. The [AMC] endorses the Federal Trade Commission's 
policy governing its use of monetary equitable remedies in competition 
cases.'' \3\ Other well-respected antitrust practitioners, such as 
former FTC Chairman Pitofsky, also have expressed support for using 
disgorgement only in exceptional cases.\4\
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    \2\ Press Release, Fed. Trade Comm'n, FTC Issues Policy 
Statement on Use of Monetary Remedies in Competition Cases (July 31, 
2003), available at http://www.ftc.gov/opa/2003/07/disgorgement.shtm.
    \3\ Antitrust Modernization Comm'n, Report and Recommendations 
288 (2007). In fact, four of the AMC Commissioners recommended 
``that the DOJ adopt a policy similar to the FTC's Policy Statement 
to articulate the circumstances in which it would exercise its 
authority to seek equitable monetary remedies.'' Id. n.*.
    \4\  See Statement of Chairman Pitofsky and Commissioners Sheila 
F. Anthony and Mozelle W. Thompson, Hearst Trust, File No. 991-0323, 
at 1, available at http://www.ftc.gov/os/2001/04/hearstpitantthom.htm (``The remedy of disgorgement should be sought 
by the Commission in competition cases only in exceptional 
circumstances.'').
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    Rescinding the bipartisan Policy Statement signals that the 
Commission will be seeking disgorgement in

[[Page 47072]]

circumstances in which the three-part test heretofore utilized under 
the Statement is not met, such as where the alleged antitrust violation 
is not clear or where other remedies would be sufficient to address the 
violation. I have significant concerns about sending such a signal and 
seeking disgorgement in such situations.
    In withdrawing the Policy Statement, the majority makes the vague 
assertion that ``[i]t has been our experience that the Policy Statement 
has chilled the pursuit of monetary remedies in the years since the 
statement's issuance.'' \5\ I have not been presented with any evidence 
that the Policy Statement has inappropriately constrained the 
Commission in the nine years it has been in effect. This begs the 
questions why the agency needs to rescind the Policy Statement now and 
why it should not perhaps be revised rather than rescinded altogether.
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    \5\ Fed. Trade Comm'n, Withdrawal of the Commission's Policy 
Statement on Monetary Equitable Remedies in Competition Cases, at 2 
(July 31, 2012).
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    The guidance in the Policy Statement will be replaced by this view: 
``[T]he Commission withdraws the Policy Statement and will rely instead 
upon existing law, which provides sufficient guidance on the use of 
monetary equitable remedies.'' \6\ This position could be used to 
justify a decision to refrain from issuing any guidance whatsoever 
about how this agency will interpret and exercise its statutory 
authority on any issue. It also runs counter to the goal of 
transparency, which is an important factor in ensuring ongoing support 
for the agency's mission and activities. In essence, we are moving from 
clear guidance on disgorgement to virtually no guidance on this 
important policy issue.
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    \6\ Id. at 1.
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    Finally, I am troubled by the seeming lack of deliberation that has 
accompanied the withdrawal of the Policy Statement. Notably, the 
Commission sought public comment on a draft of the Policy Statement 
before it was adopted. That public comment process was not pursued in 
connection with the withdrawal of the statement. I believe there should 
have been more internal deliberation and likely public input before the 
Commission withdrew a policy statement that appears to have served this 
agency well over the past nine years.

[FR Doc. 2012-19185 Filed 8-6-12; 8:45 am]
BILLING CODE 6750-01-P