[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Notices]
[Pages 42569-42574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20144]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
Policy Statement Regarding Duration of Competition and Consumer
Protection Orders
AGENCY: Federal Trade Commission.
ACTION: Notice of policy statement.
-----------------------------------------------------------------------
SUMMARY: This notice describes the Federal Trade Commission's Policy
Statement regarding the duration of future and existing administrative
cease and desist orders as well as federal district court orders in
competition and consumer protection matters. Under this Policy
Statement, the Commission will ordinarily terminate (``sunset'') future
competition and consumer protection administrative orders automatically
after twenty years, unless the Commission or the Department of Justice
has filed a complaint (with or without an accompanying consent decree)
in federal court to enforce such order pursuant to Section 5(1) of the
Federal Trade Commission Act (``FTCA)''. This policy will not extend to
federal court orders. The Commission also intends to terminate each
existing administrative order twenty years after it was issued, unless
the Commission or the Department of Justice has filed a complaint (with
or without an accompanying consent decree) in federal court to enforce
such order pursuant to Section 5(1) of the FTCA during the twenty years
preceding the adoption of the Policy Statement, or unless such a
complaint is filed after the adoption of the Policy Statement and
within twenty years after the order's issuance. The Commission intends
to implement its new policy with respect to existing administrative
orders through rulemaking.
[[Page 42570]]
In adopting this Policy Statement, the Commission considered
comments filed in response to the Commission's ``Policy Statement With
Request for Public Comment Regarding Duration of Competition Orders and
Request for Public Comment Regarding Duration of Consumer Protection
Orders,'' published in the Federal Register on September 1, 1994. 59
Fed. Reg. 45286. This new Policy Statement will supersede the Policy
Statement Regarding Duration of Competition Orders adopted on July 22,
1994. In addition, the Commission is publishing and seeking comment on
a Notice of Proposed Rulemaking to implement its policy with respect to
existing administrative orders. The Commission is also soliciting
comment regarding this Policy Statement.
DATES: Comments must be received on or before September 15, 1995.
ADDRESSES: Written comments should be directed to: FTC/Office of the
Secretary, Room 159, 6th St. & Pa. Ave. N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT:
Donald S. Clark, Secretary, Federal Trade Commission, (202) 326-2514;
Roberta Baruch, Deputy Assistant Director for Compliance, Bureau of
Competition, (202) 326-2861; or Justin Dingfelder, Assistant Director
for Enforcement, Bureau of Consumer Protection, (202) 326-3017.
SUPPLEMENTARY INFORMATION: The Commission adopted its existing policy
regarding the duration of competition orders on July 22, 1994. Under
that policy, the Commission presumes that core provisions in future
competition administrative orders and federal court orders should
ordinarily terminate automatically after twenty years.\1\ The
Commission also presumes that all supplemental provisions in future
competition orders should sunset after no more than ten years.\2\ In
addition, in the context of petitions to reopen and vacate existing
competition administrative orders, the Commission applies a rebuttable
presumption that the public interest warrants terminating orders that
have been in force for more than twenty years. The notice announcing
this policy also requested public comment on whether consumer
protection orders also should be sunsetted.
\1\ Core provisions prohibit practices that would be unlawful
whether used by parties subject to the order at issue or by other
similarly situated persons or entities.
\2\ Supplemental provisions are intended to prevent a respondent
or defendant from repeating a law violation or to mitigate the
effects of prior illegal conduct. Such provisions either prohibit or
restrict conduct that would be lawful if engaged in by parties not
subject to the order at issue or impose an affirmative obligation
not otherwise required by law.
---------------------------------------------------------------------------
The Commission received 23 comments in response to its invitation.
The commenters expressed nearly unanimous support for the Commission's
current policy of terminating competition orders. However, most of the
commenters recommended that the Commission amend the policy statement
by shortening the sunset period for new competition orders and by
terminating existing orders automatically rather than applying a
presumption in favor of termination in response to petitions to reopen.
Of the 23 commenters, 19 supported adopting a sunset policy for
both future and existing consumer protection orders, three opposed it,
and one did not address the issue. The three commenters opposing
sunsetting consumer protection orders were the FTC-Working Group of the
National Association of Attorneys General (``NAAG''), the American
Association of Retired Persons (``AARP''), and the Center for Science
in the Public Interest (``CSPI'').
The three commenters who opposed sunsetting consumer protection
orders argued that such action is unnecessary because consumer
protection orders merely require respondents to refrain from unfair or
deceptive behavior that is unlawful under any circumstances, without
respect to changes in market, organizational, or other conditions. AARP
asserted that the absence of Commission action in a particular area
does not necessarily indicate that the practices proscribed by earlier
orders in that area have ceased to be illegal. CSPI asserted that the
reopening process serves as an effective procedure for relief for
companies and individuals that find themselves subject to outdated
orders. The FTC-NAAG Working Group suggested that the requirements of
complying with Commission orders might have the potential to reduce
company costs by heightening the sensitivity of company personnel to
consumer protection law issues, thus reducing the likelihood of having
to defend against allegations regarding future violations.
The commenters who favored sunsetting consumer protection orders
advanced considerations that are essentially the same as those that the
Commission considered in deciding to sunset competition orders. In
their view, changes in legal and market circumstances over time reduce
the need to maintain orders to deter recidivism, and make continued
existence of these orders burdensome and anti-competitive. Several
commenters asserted that the enforcement options available to the
Commission for deterring violations of law have expanded significantly
over the years, making it unnecessary to rely on perpetual order
restrictions. Finally, some commenters recommended automatically
terminating consumer protection orders after ten years, while others
recommended automatically terminating them after twenty years and
applying a presumption for terminating these orders after ten years in
response to a petition to reopen.
On the basis of the comments received and other considerations, the
Commission has concluded that the existing policy regarding the
duration of competition orders should be revised in three key respects.
First, the new Policy Statement explicitly sets forth a circumstance in
which future competition orders would endure more than twenty years.
Whereas the existing policy states that core provisions in future
orders ``ordinarily'' will sunset in twenty years, the new Policy
Statement provides that core provision in future competition
administrative orders will ordinarily sunset in twenty years, unless
either the Commission or the Department of Justice has filed a
complaint (with or without an accompanying consent decree) in federal
court to enforce such order pursuant to Section 5(1) of the FTCA.\3\
\3\ The filing of such a complaint will not affect the duration
of the order if the complaint is dismissed or the court rules that
the respondent did not violate any provision of the order and the
dismissal or ruling is either upheld on appeal or not appealed.
---------------------------------------------------------------------------
Second, the new Policy Statement sets forth the Commission's
intention to dispense with the petitioning process to sunset existing
competition orders and instead sunset such orders through rulemaking.
The rule, proposed elsewhere in the Federal Register, would
automatically sunset each existing administrative order twenty years
after it was issued, unless the Commission or the Department of Justice
has filed a compliant (with or without an accompanying consent decree)
in federal court to enforce such order pursuant to Section 5(1) of the
FTCA during the twenty years preceding the adoption of the Policy
Statement, or unless such a compliant is filed after the adoption of
the Policy Statement and within twenty years after the order's
issuance. Third, the new Policy Statement will not apply to Federal
court orders.
The Commission's present policy regarding the duration of consumer
[[Page 42571]]
protection administrative orders and federal court orders is that core
provisions and some type of supplemental provisions continue in effect
indefinitely and that certain other types of supplemental provisions
terminate after a specified period of time, usually five or ten years.
On the basis of comments received and other considerations, the
Commission has concluded that consumer protection administration
orders, like competition administration orders, ordinarily fulfill
their remedial purposes within twenty years. Accordingly, the
Commission will presume that core provisions and supplemental
provisions that would otherwise be perpetual in future consumer
protection administrative orders should terminate (or ``sunset'')
automatically within twenty years after the order's issuance, unless
either the Commission or the Department of Justice has filed a
compliant (with or without an accompanying consent decree) in federal
court to enforce such order pursuant to Section 5(1) of the FTCA. This
will not affect the current practice of terminating certain
supplemental provisions earlier than twenty years (e.g., provisions
requiring distribution of the order). The Commission intends to
implement its new policy with respect to existing orders through
rulemaking. The Commission's new policy with respect to future
administrative orders will be effective immediately.
However, the Commission has determined that it will not extend the
policy of sunsetting consumer protection orders to federal court orders
at this time. As discussed in the Policy Statement, many consumer
protection federal court orders (e.g., fraud orders entered under
section 13(B) of the FTCA) pose significantly different considerations
than either competition or consumer protection administrative orders.
In addition, the Commission has significantly less experience on which
to conclude that such orders serve their purpose after twenty years.
For example, most section 13(b) fraud orders first originated in the
1980s.
Statement of Policy with Respect to Duration of Competition and
Consumer Protection Orders
This statement describes the policies that the Commission has
adopted with respect to the duration of competition and consumer
protection administrative orders and federal court orders. This new
Policy Statement supersedes the Policy Statement Regarding Duration of
Competition Orders adopted on July 22, 1994.
Competition Administrative Orders
The injunctive provisions in competition administrative orders may
proscribe future violations of statutory prohibitions--and secure
adherence to statutory requirements--including the prohibition of
unfair methods of competition embodied in section 5 of the FTCA, 15
U.S.C. 45, and the prohibitions and requirements embodied in sections
2, 3, 7, 7A, and 8 of the Clayton Act, 15 U.S.C. 13, 14, 18, 18a, and
19.\4\
\4\ Competition administrative orders may include types of
relief that are not addressed in this statement because they have no
further effect once the actions they require have been taken. For
example, some orders require divestitures, revisions to bylaws, or
publication of the administrative compliant and order.
---------------------------------------------------------------------------
As a matter of law, the remedial provisions of Commission orders
must bear a reasonable relationship to the unlawful practices found to
exist, and must be sufficiently clear and precise to be easily
understood by the respondents or defendants.\5\ Particular order
provisions may prohibit both the specific illegal practices alleged in
the associated complaint and ``like and related'' practices.\6\
\5\ See, e.g., FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392-
95 (1965); FTC v. National Lead Co., 352 U.S. 419, 428-30 (1957);
FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952); FTC v. Cement Inst.,
333 U.S. 683, 726 (1948); Jacob Siegel Co. v. FTC, 327 U.S. 608,
611-13 (1946).
\6\ See FTC v. Mandel Bros., Inc., 359 U.S. 385, 393 (1959);
Consumers Products of America, Inc. v. FTC, 400 F.2d 930 (3d Cir.
1968), cert. denied, 393 U.S. 1088 (1969); Nirsk Indus. v. FTC., 278
F.2d 337, 343 (7th Cir.), cert denied, 364 U.S. 883 (1960). For
example, in FTC v. Colgate-Palmolive Co., 380 U.S. 374, 395 (1965),
the Supreme Court reviewed a Commission order that prohibited a
particular advertising practice not only for the product at issue in
the case, but also for any other product. The Court sustained the
scope of the order provision, stating that
[t]he Commission is not limited to prohibiting the illegal
practice in the precise form in which it is found to have existed in
the past. Having been caught violating the Act, respondents `must
expect some fencing in.'
Id. at 395, quoting FTC v. National Lead Co., 352 U.S. at 431,
and FTC v. Ruberoid Co., 343 U.S. at 473.
---------------------------------------------------------------------------
Where such a provision has been included in an order, the
Commission may prevail in a subsequent enforcement proceeding simply by
establishing that the respondent or defendant did not comply with the
terms of the provision, without having to also establish that the
conduct prohibited by the provision is illegal, or that the conduct
required is reasonably related to the prevention of illegal practices.
Future Orders
The Commission announced its current policy of sunsetting
competition orders on September 1, 1994. 59 Fed. Reg. 45,286 (1994).
Under that policy, core provisions of future competition orders are
ordinarly sunsetted at twenty years, and supplemental provisions are
sunsetted at up to 10 years.
After reviewing the comments and considering other available
information, the Commission continues to believe that core provisions
of competition administrative orders should ordinarily sunset after
twenty years and that supplemental provisions should sunset after up to
ten years.\7\ None of the comments supplied information that the
Commission had not already considered in choosing ordinarily to sunset
core provisions in competition orders after twenty years and
supplemental provisions after up to ten years. Therefore, the
Commission is not changing the sunset periods for core or supplemental
provisions in future competition orders.
\7\ Only in an exceptional case will the Commission adopt a
sunset period longer or shorter than twenty years for core
provisions. The Commission does not intend to change, in general,
the expirtation periods of particular types of supplemental
provisions that, as a matter of policy, have been set to expire by
their own terms after periods of up to ten years.
---------------------------------------------------------------------------
However, the Commission has determined that the duration of future
orders should be extended in instances where a complaint has been filed
in federal court pursuant to section 5(1) of the FTCA, 15 U.S.C. 45(1),
while the order remains in force, alleging a violation of such order.
The twenty year sunset period will start anew on the date of the
complaint is filed in federal court. However, the filing of such a
complaint will not affect the duration of any supplemental order
provision that terminates before twenty years. In addition, the filing
of such a complaint will not affect the duration of the order's
application to any respondent that is not named as a defendant in such
complaint.\8\ Furthermore, the filing of
[[Page 42572]]
such complaint will not affect the duration of the order if the
complaint is dismissed or if a court rules that the defendant did not
violate any provision of the order, and the dismissal or ruling is
either not appealed or upheld on appeal.
\8\ To implement this policy, new Commission administrative
orders will include a provision similar to the following:
This order will terminate twenty years from the date of its
issuance, or twenty years from the most recent date that the United
States or the Federal Trade Commission files a complaint (with or
without an accompaning consent decree) in federal court alleging any
violation of the order, whichever comes later; provided, however,
that the filing of such a complaint will not affect the duration of:
A. Any paragraph in this order that terminates in less than
twenty years;
B. This order's application to any respondent that is not named
as a defendant in such complaint; and
C. This order if such complaint is filed after the order has
terminated pursuant to this paragraph.
Provided further, that if such complaint is dismissed or a
federal court rules that the respondent did not violate any
provision of the order, and the dismissal or ruling is either not
appealed or upheld on appeal, then the order will terminate
according to this paragraph as though the complaint was never filed,
except that the order will not terminate between the date such
complaint is filed and the later of the deadline for appealing such
dismissal or ruling and the date such dismissal or ruling is upheld
on appeal.
A five year statute of limitations applies to civil penalty
actions filed in federal court pursuant to section 5(1) of the FTCA.
See 28 U.S.C. 2462. Therefore, it is conceivable that the government
could file a complaint up to five years after an order has
terminated challenging violations that occurred while the order was
in force. Under the Policy Statement, the filing of a complaint
after the order has terminated will not affect the duration of the
order.
---------------------------------------------------------------------------
The filing of a complaint (with or without an accompanying consent
decree) under section 5(1) of the FTCA indicates that the Commission
had reason to believe the order was violated. This finding undermines
the ordinary presumption that there is no need for further order
coverage with respect to that respondent beyond twenty years.\9\
\9\ The Commission retains the discretion to change the duration
of an order pursuant to 16 CFR 2.51 or 3.72. Unless an order
modification expressly changes the duration of an order, such
modification will not affect the duration of the order as determined
by this Policy Statement. Nothing in this Policy Statement will
affect the Commission's standards for reopening and modifying or
vacating orders pursuant to 15 U.S.C. 45(b) or 16 CFR 2.51.
---------------------------------------------------------------------------
Existing Orders
Under existing policy, respondents under competition administrative
orders twenty years old may have their orders sunsetted through the
order modification process, absent recidivist conduct or extraordinary
circumstances.\10\ Many commenters recommended that the Commission
modify its policy with respect to the duration of existing
administrative orders that have remained in force for twenty or more
years. They recommended that the Commission terminate such orders
automatically without engaging in a case-by-case review of each order
through the petitioning process.
\10\ The Commission states as follows in its 1994 Policy
Statement regarding the duration of competition orders:
If, however, public comments, the Commission's experience
enforcing the order, an ongoing antitrust investigation of the
petitioner or the industry in which the petitioner competes at the
Commission or the Department of Justice, or other readily available
information raised substantial concerns about whether the public
interest warrants retaining the order, such further review will be
conducted as necessary to determine whether the public interest is
best served by setting aside the order, modifying it, or retaining
it as written. The Commission anticipates that, absent extraordinary
circumstances, the basis for rebutting the presumption will be
information that the petitioner has engaged in recidivist conduct.
Id. at 45,286-87 (emphasis added).
---------------------------------------------------------------------------
The Commission has concluded that these recommendations have merit.
The new Policy defines in bright-line fashion the principal
circumstances in which extended order coverage is required (the filing
of an order enforcement action). The cost of the Commission retraining
added discretion as to whether it should retain older orders, thereby
requiring a case-by-case analysis with respect to each petition, likely
exceeds the benefits of retaining older orders in extraordinary
circumstances. By adopting a policy that does not require the
Commission to exercise discretion with respect to individual orders,
the Commission will conserve scarce resources and ensure equitable
treatment of similarly situated respondents now subject to
administrative orders.
The new Policy Statement sets forth the Commission's intention to
dispense with the petitioning process to sunset existing competition
orders and instead sunset such orders through rulemaking. The proposed
rule, published elsewhere in the Federal Register, would automatically
sunset each existing administrative order twenty years after it was
issued, unless the Commission or the Department of Justice has filed a
complaint (with or without an accompanying consent decree) in federal
court to enforce such order pursuant to Section 5(1) of the FTCA during
the twenty years preceding the adoption of the Policy Statement, or
unless such a complaint is filed after the adoption of the Policy
Statement and within twenty years after the order's issuance. Under the
proposed rule, existing orders that do not terminate twenty years after
they are issued due to the filing of a section 5(1) complaint would
terminate twenty years after the filing of the most recent complaint to
enforce the order. However, the filing of such a complaint would not
affect the order's duration unless the order is in force on the date
the complaint is filed.\11\ In addition, the filing of such a complaint
will not affect the duration of the order's application to any
respondent that is not named as a defendant in the complaint. The
filing of such a complaint will only extent the duration of those order
provisions not set to expire by their own terms. For example, a
reporting requirement in an existing order that terminates ten years
after the order's issuance will not be extended by the filing of such a
complaint, even if the section 5(1) complaint is filed within that
first ten years after the order's issuance. In addition, the filing of
such a complaint will not affect the duration of the order if the
complaint is dismissed or the court rules that the respondent did not
violate any provision of the order, and the dismissal or ruling is
either not appealed or upheld on appeal.
\11\ As discussed in fn. 8, supra, a five year statute of
limitations applies to civil penalty actions filed under section
5(1) of the FTCA.
---------------------------------------------------------------------------
The Commission intends to implement this policy with respect to
existing administrative orders through rulemaking rather than through
adjudication.\12\ The proposed rulemaking contemplates that respondents
will receive notice through the rulemaking process and will not receive
individual notice that their orders have been terminated. Until this
rulemaking is completed, the Commission will leave in place its current
policy regarding the duration of existing competition administrative
orders.
\12\ The Commission has the discretion to regulate parties
through issuance of a rule of general applicability as opposed to
adjudication of individual cases. SEC v. Chenery Corp., 332 U.S. 194
(1947); Heckler v. Ringer, 446 U.S. 602, 617, (1984); Nat'l Small
Shipments Traffic Conf., Inc. v. ICC, 725 F. 2d 1442, 1447 (D.C.
Cir. 1984). This is so even if the rule may effectively limit or
terminate rights or obligations in a specific case. United States v.
Storer Broadcasting Co., 351 U.S. 192, 205 (1956). An agency may
properly rely upon rulemaking to resolve certain classes of issues
that the agency might otherwise adjudicate on an individual basis.
Heckler v. Campbell, 461 U.S. 458, 467 (1982). As the court
explained:
[E]ven where an agency's enabling statute expressly requires it
to hold a hearing, the agency may rely on its rulemaking authority
to determine issues that do not require case-by-case consideration.
* * * A contrary holding would require the agency continually to
relitigate in a single rulemaking proceeding.
Id. Under the Policy Statement, the Commission does not propose
to exercise any discretion regarding the termination of existing
orders. To apply the proposed criteria for terminating existing
orders to any particular order, one need only ascertain a few facts,
all of which are easily ascertained and present no issues of fact
requiring case-by-case examination.
---------------------------------------------------------------------------
Consumer protection administrative orders
Like competition orders, consumer protection orders perform several
functions. First, they may proscribe future violations of statutory
prohibitions--and secure adherence to statutory requirements--including
the prohibition of unfair and deceptive acts or practices embodied in
Section 5 of the FTCA, and the prohibitions and requirements embodied
in other statutes intended to protect consumers, such as the Fair
Credit Reporting Act, 15 U.S.C. 1681, the Truth-in-Lending Act, 15
[[Page 42573]]
U.S.C. 1601-1667, and the Wool Products Labeling Act, 15 U.S.C. 68.
Second, orders may require those subject to them to keep records,
distribute the order, or file reports with the Commission to facilitate
Commission efforts to monitor or enforce compliance with the order.
Under the Commission's existing practice, Commission order
provisions that prohibit or require particular types of conduct to
prevent ``unfair or deceptive acts or practices'' have different
durations depending on their type. Core provisions prohibit practices
that would be unlawful whether engaged in by parties subject to the
order at issue or by other similarly situated persons or entities.
Under current policy, core provisions in consumer protection orders
typically continue in force indefinitely, and a respondent bears the
burden of establishing (in the context of a petition to reopen) that
such a provision should be modified or set aside.
All other provisions in consumer protection orders may be
categorized as supplemental provisions,\13\ which are intended to
prevent a respondent or defendant from repeating a law violation or to
mitigate the effects of prior illegal conduct. Under existing policy,
some supplemental provisions in consumer protection orders terminate
automatically after different prescribed periods. For example, some
advertising disclosure, order distribution, and reporting requirements
expire in five or ten years.
\13\ The Commission may also impose or seek types of relief in
administrative orders that are not addressed in this statement
because they have no further effect once the actions they require
have been taken. For example, some orders require the payment of
redress to consumers, the payment of disgorgement to the United
States Treasury, or the dissemination of corrective advertising for
a limited time.
---------------------------------------------------------------------------
Future Orders
The Commission has concluded that there also is reason to sunset
consumer protection orders. As commenters noted, many older orders
contain supplemental relief that could become over-regulatory over time
or impose requirements that the Commission would not adopt under
current practice. There also are costs to perpetual core provisions in
consumer protection orders. Basic prohibitions against misrepresenting
or failing to have substantiation still require interpretation and may
induce some companies to be more cautious than their competitions
within the range of permissible advertising practices. Over time,
changes in management or corporate culture may no longer warrant this
extra caution and result in competitive imbalances.\14\
\14\ Although it is true, as some comments point out, that
respondents subject to orders containing over-regulatory provisions
can petition the Commission to reopen and vacate such orders, the
filing of petitions entails costs for both respondents and the
Commission.
---------------------------------------------------------------------------
At the same time, it can be argued that consumer protection orders
should remain in effect for a longer period than competition orders. A
principal rationale for sunsetting competition orders was that even the
core relief in such orders may become outdated or inhibit pro-
competitive conduct if, due to changes in market conditions, the
prohibited conduct no longer unreasonably restrains competition.\15\ A
number of commenters noted that consumer protection orders, by
contrast, contain core prohibitions that remain valid regardless of
marketing conditions (e.g., ``cease misrepresenting'').\16\ Although
supplemental relief in consumer protection orders may share some
attributes of supplemental relief in competition order,\17\ it often
does not share the added problem of the related core relief becoming
invalid due to changed market conditions.
\15\ This is not true of those competition orders based on per
se violations, such as price-fixing. However, a much larger
proportion of consumer protection orders are based on core concepts
that remain valid despite changes in market conditions.
\16\ See comments of NAAG, AARP, and CSPI.
\17\ Supplemental relief in consumer protection orders tends to
be more detailed in its prohibitions than core relief, and thus more
potentially burdensome. However, that is equally true of
supplemental relief in competition orders.
Thus, the Commission reasonably also could have decided that the
core and supplemental relief in consumer protection orders should
remain in effect longer than that in competition orders (e.g., thirty
years for core and twenty years for supplemental). However, the
distinctions between supplemental and core provisions in consumer
protection orders are not always clearly delineated, suggesting the
need for a uniform sunset period. For example, a provision may bar a
deceptive claim as deceptive, unless the claim is followed by a
disclosure. It could be argued that such ``triggering'' provisions have
both a core relief component to them (barring a claim as deceptive) and
a supplemental relief aspect to them (requiring a disclosure if the
claim is made). There may be disagreements over whether to characterize
such disclosures as supplemental or core relief if the policy were to
distinguish between the two, leading to anomalous results.
This resulting ambiguity regarding the characterization of
particular provisions in consumer protection orders could undermine the
clarity of Commission orders, raising respondents' cost of compliance
and negotiating settlements and Commission costs in ensuring the
enforceability of its orders. By contrast, as a general matter,
competition orders differentiate between core and fencing-in and
supplemental relief. Consequently, the Commission has determined that
it is appropriate to differentiate between consumer protection and
competition orders in this respect by ordinarily sunsetting both core
and supplemental relief in consumer protection administrative orders
after twenty years.\18\
\18\ Only in an exceptional case will the Commission adopt a
sunset period longer or shorter than twenty years for core
provisions The Commission does not intend to change, in general, the
expiration periods of particular types of supplemental provisions
that, as a matter of policy, have been set to expire by their own
terms after periods of up to ten years such as: (1) Administrative
boilerplate (e.g., recordkeeping, order distribution, and reporting
requirements); and (2) some types of disclosure requirements (e.g.,
informercial disclosures that sunset after ten years; See TV Inc.,
Docket No. C-3296 (1990)).
---------------------------------------------------------------------------
Existing Orders
The Commission has determined that the new policy for terminating
existing competition administrative orders described above will also
apply to consumer protection administrative orders.\19\
\19\ The termination under the policy Statement of an order
issued in connection with a determination by the Commission that the
respondent had engaged in an unfair or deceptive practice would not
affect the ability of the Commission to recover a civil penalty
based on that determination pursuant to Section 5(m)(1)(B) of the
FTCA, 15 U.S.C. 45(n)(1)(B).
---------------------------------------------------------------------------
Competition and Consumer Protection Federal Court Orders
This new policy shall not apply to either competition or consumer
protection federal court orders. The Commission has determined not to
do so for several reasons. Many consumer protection federal court
orders obtained since the early 1980s pursuant to Section 13(b) of the
FTCA address particularly egregious conduct such as hard core fraud.
Given that none of these orders have been in force for twenty years,
the Commission lacks sufficient information to determine whether their
remedial purposes will be served within twenty years.\20\ Therefore,
the Commission has determined, at least of now, not to sunset the core
provisions
[[Page 42574]]
and some supplemental provisions in these orders.
\20\ The Commission notes that it does not have the power to
unilaterally sunset federal court orders. Every federal court order
must be entered by federal court to become effective. In order to
sunset an existing federal court order, one or more parties thereto
would have to file a motion with the court seeking termination of
the order.
---------------------------------------------------------------------------
In addition, many consumer protection federal court orders simply
prohibit violations of Commission trade regulation rules (e.g.,
Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures, 16 CFR 436) or statutes otehr than the
FTCA enforced by the Commission (e.g., Equal Credit Opportunity Act, 15
U.S.C. 1691). The core provisions in such orders are presumptively
valid beyond twenty years in that they require adherence to regulations
and statutes that are already binding on the defendants as well as
their competitors. Moreover, many of these order do not contain
supplemental provisions other than those that, as a matter of
Commission policy, normally terminate after up to ten years. Therefore,
there is no compelling reason to sunset such orders.
Finally, most competition and some consumer protection federal
court orders simply prohibit violations of Commission administrative
orders. These federal court orders will cease to have any effect once
the underlying administrative orders are terminated pursuant to this
Policy Statement. Therefore, there is no compelling reason to sunset
these federal court orders.
By direction of the Commission.
Issued: August 7, 1995
Donald S. Clark,
Secretary.
Concurring Statement of Commissioner Mary L. Azcuenaga Concerning
Revised Statement of Policy On Duration of Commission Orders
August 1995.
The Commission today has approved a revised statement issued in
July, 1994, that applied only perspectively and did not apply to
consumer protection orders. In 1994, when the Commission issued its
statement, I wrote separately to say that the Commission should
apply a sunset policy to all its administrative orders, both
consumer protection and competition orders and existing and future
orders. I also expressed the view that the Commission need not issue
individual orders modifying or vacating existing orders but easily
could accomplish the same goal through publication of an appropriate
notice in the Federla Register. I am gratified that today's
statement is fully consistent with myv laws of a year ago and now, I
am pleased to join the Commission in its current decision.
[FR Doc. 95-20144 Filed 8-15-95; 8:45 am]
BILLING CODE 6750-01-M
