[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Notices]
[Pages 75324-75325]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26104]


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FEDERAL TRADE COMMISSION

[File No. 201 0014]


Stryker and Wright Medical; Analysis of Consent Orders To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; correction.

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SUMMARY: The Federal Trade Commission published a document in the 
Federal Register of November 9, 2020, concerning the proposed consent 
agreement in the Matter of Stryker and Wright Medical. That document 
did not contain the Statement of Commissioner Rohit Chopra regarding 
this matter. This document corrects the omission.

FOR FURTHER INFORMATION CONTACT: Jonathan Ripa (202-326-2230), Bureau 
of Competition, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Correction

    In the Federal Register of November 9, 2020, in FR Doc.2020-24813, 
on page 71343, in the first column, after the signature of April J. 
Tabor, Acting Secretary, add the following:

Statement of Commissioner Rohit Chopra

    Independent monitors and watchdogs are shadow regulators that 
promise to impartially report to the government. These individuals are 
typically paid by companies engaged in alleged wrongdoing as part of a 
settlement. Monitors typically have relevant expertise in an industry 
and are often former government officials.
    In this matter, the Federal Trade Commission is resolving 
allegations that the merger between Stryker and Wright is unlawful by 
requiring divestitures and other provisions that will be overseen by an 
independent monitor. I write separately to detail some of my ongoing 
concerns regarding the lack of adequate protections against independent 
monitor conflicts of interest in FTC orders.

Monitor Independence

    Over the last twenty years, there has been substantial concern 
about whether auditors and other third parties are truly independent, 
or whether they are influenced by seeking additional fees for future 
business.\1\ When it comes to monitors of settlements, an independent 
monitor ideally believes its primary responsibilities are to the 
government agency that relies on their work to ensure compliance with a 
settlement or order.
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    \1\ Ken Brown & Ianthe Jeanne Dugan, Arthur Anderson's Fall From 
Grace Is a Sad Tale of Greed and Miscues, Wall St. J. (June 7, 
2002), https://www.wsj.com/articles/SB1023409436545200; Ben Protess 
& Jessica Silver-Greenberg, New York Regulator Moves to Suspend 
Promontory Financial, N.Y. Times: DealBook/Business & Pol'y (Aug. 3, 
2015), https://www.nytimes.com/2015/08/04/business/dealbook/new-york-regulator-moves-to-suspend-promontory-financial.html; Jeff 
Horwitz, US to fire monitor overseeing formerly for-profit colleges, 
The Seattle Times (Mar. 14, 2016), https://www.seattletimes.com/business/trouble-remains-following-failed-for-profit-schools-revival-3/.
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    Unfortunately, they are not always so independent, given potential 
incentives for their firms to seek additional business with companies 
subject to monitoring. For example, in the FTC's investigation of 
Facebook for compliance with its privacy obligations under a 2012 
Commission order, the FTC alleged major violations of the order even 
though PriceWaterhouseCoopers (PwC) was supposedly providing an 
independent assessment of the company's compliance.\2\ In fact, I am 
unable to identify any recent case where a monitor has identified a 
material order violation that led to a subsequent penalty action.
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    \2\ See Nitasha Tiku, Facebook's 2017 Privacy Audit Didn't Catch 
Cambridge Analytica, Wired (Apr. 19, 2018), https://www.wired.com/story/facebooks-2017-privacy-audit-didnt-catch-cambridge-analytica/; 
see also Dissenting Statement of Commissioner Rohit Chopra In re 
Facebook, Inc., Comm'n File No. 1823109 (July 24, 2019), https://www.ftc.gov/system/files/documents/public_statements/1536911/chopra_dissenting_statement_on_facebook_7-24-19.pdf.
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    The Commission's practice is to have the party alleged to have 
engaged in a law violation propose a monitor, subject to Commission 
approval. The party is also responsible for paying the monitor's fees, 
which can be substantial.
    In this matter, the Commission has appointed a monitor who is an 
employee of a French-based global advisory business, Mazars, which 
provides consulting, accounting, tax, and other services.\3\ The 
agency's order requires the monitor to simply self-report any potential 
conflicts of interest. While this is better than nothing, it is not 
adequate, particularly when the monitor is employed by a large firm 
that offers a wide array of consulting and compliance-related services 
to companies like the targets in this matter. For example, will the 
monitor need to self-report a conflict when other units of Mazars bid 
for business with the merged entity? Many of these questions are 
unclear.
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    \3\ Analysis of Agreement Containing Consent Orders to Aid 
Public Comment, In the Matter of Stryker/Wright Medical, File No. 
191-0039; see also About Us, Mazars (last visited Nov. 2, 2020), 
https://mazarsusa.com/about/.
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Protecting the Public From Conflicts of Interest

    The Commission should strengthen the conflict-of-interest and 
transparency provisions in our orders related to monitors across the 
FTC's mission by exploring whether to:
     Require monitors and their employers to agree to non-
solicit provisions for a period of time after the completion of a 
monitoring engagement.\4\
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    \4\ See Statement of Commissioner Rohit Chopra Regarding 
Miniclip and the COPPA Safe Harbors, Comm'n File No. 1923129, (May 
18, 2020), https://www.ftc.gov/system/files/documents/public_statements/1575579/192_3129_miniclip_-_statement_of_cmr_chopra.pdf.
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     Publish certain work products of monitors that detail 
their activities to ensure order compliance.\5\
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    \5\ See Statement of Commissioner Rohit Chopra In the Matter of 
Uber Technologies Inc., Comm'n File No. 1523054, (Oct. 26, 2018), 
https://www.ftc.gov/system/files/documents/public_statements/1418195/152_3054_c-4662_uber_technologies_chopra_statement.pdf.
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     Create open application processes for potential monitors 
to detail their qualifications, as the Commission pursued in the 
Herbalife matter.\6\
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    \6\ See In the Matter of Federal Trade Commission, Plaintiff, v. 
Herbalife International of America, Inc., Applications for 
Compliance Auditors, (Aug. 31, 2016), https://www.ftc.gov/public-statements/2016/08/applications-herbalife-independent-compliance-auditor.
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     Require monitors to attest, under penalty of perjury, that 
they hold no financial interests in the industry of the companies 
subject to monitoring.
    I am skeptical that the Commission can truly remedy anticompetitive 
harm with complex settlements that require independent monitors. While 
many monitors certainly provide independent advice and analysis, it is 
critical that their actions are never distorted by any real or 
perceived conflicts of interest.


[[Page 75325]]


    Dated: November 20, 2020.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-26104 Filed 11-24-20; 8:45 am]
BILLING CODE 6750-01-P