FTC Chair Leibowitz Nominated for Second Term

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The White House announced on March 4 that President Barack Obama intends to nominate FTC Chairman Jon D. Leibowitz for a second seven-year term at the Commission. The chairman's term expired last September.

Leibowitz was sworn in as a member of the Commission in September 2004. President George W. Bush nominated Leibowitz in April 2004. He was appointed during a congressional recess after his nomination—and the nomination of Deborah Platt Majoras to serve as the agency's chair—was stalled in the Senate.

Leibowitz was designated as FTC chairman by President Obama in March 2009.

Before his time at the Commission, Leibowitz served as vice president for congressional affairs for the Motion Picture Association of America from 2000 to 2004. Prior to that, he worked on Capitol Hill.

Leibowitz was the Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000. He also worked for Senators Herb Kohl (D., Wis.) and Paul Simon (D., Ill.).

FTC Testimony Highlights Privacy Protection, Competition Efforts

This posting was written by Preston Carter and Darius Sturmer.

In testimony before the U.S. Senate Subcommittee on Financial Services and General Government of the Committee on Appropriations on May 20, the FTC described the agency’s continuing work to promote competition and protect American consumers, including initiatives to stop fraud targeting financially distressed consumers and protect privacy.

FTC Chairman Jon Leibowitz summarized the FTC’s Fiscal Year 2011 budget request, noting that strong support from Congress has made the agency more effective in its consumer protection efforts.

The testimony stated that, in the past year, the FTC has brought almost 40 law enforcement actions to stop scams that prey on consumers suffering from the financial downturn, and the agency is also engaged in rulemaking and consumer education efforts related to financial services.

In the financial services area alone, the FTC has filed more than 100 actions over the past five years, and obtained nearly $500 million in redress for consumers in the past 10 years.

Privacy Protection

The testimony noted that the FTC has taken 29 actions against companies that failed to protect consumers’ personal information. These actions resulted, for example, in the agency’s securing of $11 million for consumer redress from LifeLock, Inc. for allegedly making false identity theft prevention claims (CCH Trade Regulation Reporter ¶16,421); its shutting down of a rogue Internet service provider that helped distribute illegal spam, child pornography, and other harmful content (CCH Trade Regulation Reporter ¶16,451); and its settlement of a lawsuit against Sears for not fully disclosing the scope of consumers’ personal information the company collected (CCH Trade Regulation Reporter ¶16,308).

To help consumers check for inaccurate information on their credit reports, the FTC amended the Free Credit Report Rule to help consumers avoid “free” offers that cost money. The FTC also stated that it is examining consumer privacy more broadly, especially in light of merging technologies and business models, including social networking, cloud computing, online behavior advertising, and mobile marketing.

Noting the FTC’s continuing enforcement of the Do Not Call Registry, which protects almost 200 million telephone numbers, the testimony stated that in the past year the FTC filed nine law enforcement actions against “robocallers” making deceptive telemarketing pitches.

Among these were suits against DirecTV and Comcast, which paid $2.3 million and $900,000, respectively, to settle charges that they called consumers who had asked not to be called (CCH Trade Regulation Reporter ¶16,291). More recently, the FTC announced a $500,000 settlement with Diamond Phone Card, Inc. for overstating the number of calling minutes on its prepaid calling cards (CCH Trade Regulation Reporter ¶16,452).

Also, as stated in the testimony, the FTC has worked to protect children by filing more than 14 lawsuits to enforce the Children’s Online Privacy Protection Act, obtaining more than $3.2 million in civil penalties for law violations.

Anticompetitive Practices

According to the testimony, “[o]ne of the Commission’s highest antitrust priorities is stopping pay-for-delay patent settlements in the pharmaceutical industry, a practice that costs consumers $3.5 billion each year.”

The agency “has devoted substantial resources to this issue, and is continuing to conduct new investigations into pay-for-delay agreements.”

The text of the testimony can be found here on the FTC website.

New FTC Chair Promises Continuity in Enforcement Activity

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

FTC Chairman Jon Leibowitz told attendees of the American Bar Association’s Section of Antitrust Law Spring Meeting in Washington, D.C. that they can expect continuity at the agency as he begins his term as chairman.

Speaking at the enforcement roundtable on March 27, Leibowitz said that he intends to build on the accomplishments of past FTC chairs. He said that there will be continuity in merger enforcement and health care enforcement.

Leibowitz discussed a number of merger successes, including the blocked merger between two hospital providers in Northern Virginia and the preliminary injunction against the combination of CCC Information Services Inc. and Mitchell International Inc.—the first preliminary injunction won by the agency in six years.

Pay-for-Delay Drug Agreements

One of Leibowitz’s highest priorities will be stopping pay-for-delay agreements between brand name drug makers and generic competitors. The use of these agreements under which brand name companies pay generics to stay out of the marketplace will be stopped either through litigation or legislation, according to Leibowitz.

The chairman noted that Christine Varney, the nominee for Assistant Attorney General in charge of the Department of Justice Antitrust Division, considers pay-for-delay agreements to be anticompetitive. He predicted that that the two federal antitrust agencies will be much more in sync going forward.

Standard Setting

The Commission will continue to stay active in challenging anticompetitive standard setting activity. The agency suffered a significant defeat before the U.S. Court of Appeals in Washington, D.C. in this area. The appellate court vacated a Commission decision finding that technology company Rambus Inc. engaged in deceptive conduct as a participant in the standard setting process.

Consumer Protection

On the consumer protection front, Leibowitz forecast that the Commission would continue to be active, especially with respect to sub-prime lending. He noted that the FTC action against Bear Stearns Companies, LLC and its subsidiary, EMC Mortgage Corporation for allegedly engaging in unlawful practices in servicing consumers’ home mortgage loans. The companies agreed to pay $28 million to settle to settle the FTC charges.

Two of Chairman Leibowitz’s collegues—Commissioners Paula Jones Harbour and J. Thomas Rosch—also spoke during the Spring meeting.

Competition/Privacy Nexus

Commissioner Harbour said that one of her priorities for the remainder of her term will be developing an understanding of the interplay between privacy and competition. Firms compete on price and nonprice dimensions, and privacy could be one of those dimensions.

Harbour discussed the issue during a March 25 program, entitled “Section 2 and Article 82 Circling the High-Tech Sector: Will They Coordinate or Collide.” She also discussed datasets as antitrust markets, referring to her dissent in the Commission’s 2007 decision not to challenge the Google/DoubleClick combination. In the dissent, she questioned the impact on competition from the combination of the two companies’ datasets and the corresponding privacy concerns.

Roles of Federal Antitrust Agencies

Commissioner J. Thomas Rosch defended the FTC’s record—as well as Section 5’s prohibition on unfair methods of competition—during a March 25 program, entitled “FTC’s Section 5 Hearings: New Standards for Unilateral Conduct.”

Rosch answered the question of why there are two federal antitrust agencies by distinguishing the FTC from the Department of Justice Antitrust Division. Rosch said that the Department of Justice is an arm of the Administration. By contrast, the FTC is: (1) independent and not beholden to the Administration; (2) an expert agency; and (3) a prosecutor and a judge.

Commission’s Partiality?

Responding to criticism of the Commission’s record of siding with complaint counsel, Rosch remarked that he had some concerns with what could appear to be a lack of impartiality. However, he noted that Commission opinions were appealable to federal appellate courts, and that this appealability prevented the commissioners from “indulging themselves.”

In addition to making these comments, Rosch gave an update on the agency’s progress in issuing a report on unilateral conduct. He said that it was coming and was about three-quarters finished.

Commissioner Leibowitz Named FTC Chairman

This posting was written by John W. Arden.

Confirming much speculation, President Barack Obama announced his intention to name Federal Trade Commissioner Jon Leibowitz as Chairman of the agency in a February 27 release.

Currently the only Democratic Commissioner of the FTC, Leibowitz has served as a member of the Commission since September 3, 2004. From 2000 to 2002, he was vice president for congressional affairs for the Motion Picture Association of America.

His prior government service has included working as the Democratic chief counsel and staff director for the U.S. Senate Antitrust Subcommittee from 1997 to 2000. He served as chief counsel and staff director for the Senate Subcommittee on Terrorism and Technology from 1995 to 1996 and the Senate Subcommittee on Juvenile Justice from 1991 to 1994. Previously, the Commissioner was chief counsel to Senator Herb Kohl (D-Wis.) and Senator Paul Simon (D-Ill.).

A Phi Beta Kappa graduate from the University of Wisconsin (1980), he attended the New York University School of Law, graduating in 1984.

"I am honored and grateful that President Obama has selected me to lead this remarkable agency,” Leibowitz said, in a statement released by the FTC on March 3. “I look forward to continuing our rich tradition of vigorous antitrust enforcement and consumer protection.”

Leibowitz succeeds William Kovacic, who became chairman in March 2008 when Chairman Deborah Platt Majoras resigned. According to published reports, Kovacic plans to stay on as a Commissioner.

Text of the President's February 27 announcement appears here on the White House website.

Text of the March 3 FTC statement appears here at the FTC website.