[Senate Report 106-385]
[From the U.S. Government Publishing Office]
Calendar No. 761
106th Congress Report
SENATE
2d Session 106-385
_______________________________________________________________________
FEDERAL TRADE COMMISSION REAUTHORIZATION ACT OF 1999
__________
R E P O R T
of the
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 1687
August 25, 2000.--Ordered to be printed
Filed, under authority of the order of the Senate of July 26, 2000
__________
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2000
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred sixth congress
second session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington JOHN D. ROCKEFELLER IV, West
TRENT LOTT, Mississippi Virginia
KAY BAILEY HUTCHISON, Texas JOHN F. KERRY, Massachusetts
OLYMPIA SNOWE, Maine JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan RON WYDEN, Oregon
SAM BROWNBACK, Kansas MAX CLELAND, Georgia
Mark Buse, Staff Director
Ann H. Choiniere, General Counsel
Kevin D. Kayes, Democratic Staff Director
Moses Boyd, Democratic Chief Counsel
Gregg Elias, Democratic General Counsel
Calendar No. 761
106th Congress Report
SENATE
2d Session 106-385
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FEDERAL TRADE COMMISSION REAUTHORIZATION ACT OF 1999
_______
August 25, 2000.--Ordered to be printed
Filed, under authority of the order of the Senate of July 26, 2000
_______
Mr. McCain, from the Committee on Commerce, Science, and
Transportation, submitted the following
R E P O R T
[To accompany S. 1687]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 1687) ``A Bill to amend the
Federal Trade Commission Act to authorize appropriations for
the Federal Trade Commission'', having considered the same,
reports favorably thereon with amendments and recommends that
the bill do pass.
Purpose of the Bill
The purpose of S. 1687 is to reauthorize the Federal Trade
Commission (FTC) for fiscal years 2001 and 2002 and to make
revisions to the process for reviewing merger applications.
Background and Needs
The FTC was last reauthorized in 1996 by Public Law 104-216
which provided $107 million for fiscal year 1997 and $111
million for fiscal year 1998. The Commission was not authorized
for fiscal years 1999 and 2000. It now seeks an authorization
level of $164 million for fiscal year 2001 and $177 million for
fiscal year 2002. The FTC argues that the additional funding is
necessary to address a series of issues involving the Internet
such as privacy and fraud. The FTC would also use the
additional funding to police an ever increasing number of
mergers and acquisitions.
During the hearing for S. 1687, the FTC discussed the types
of fraudulent activity that occur online and its efforts to
prevent fraud. The range of illegal activity includes bogus
investments, sure-fire cures and ``guaranteed'' money making
opportunities. In addition to those traditional scams,
criminals have developed new methods such as webcramming and
hijacking modems to charge consumers for services they have
neither requested nor approved. In response to these online
scams, Chairman Pitofsky of the FTC testified that it has
brought more than 100 law enforcement actions on behalf of
millions of online consumers, created a database of consumer
fraud complaints (Consumer Sentinel) for use by law
enforcement, and used ``surf days'' to identify more than 4,000
sites with dubious claims or online scams.\1\
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\1\ Hearing on the Reauthorization of the Federal Trade Commission,
S. 1687, before the Subcommittee on Consumer Affairs, Foreign Commerce
and Tourism, Senate Commerce Committee, 106th Cong. (February 9, 2000)
(Statement of Robert Pitofsky, Chairman of the Federal Trade
Commission).
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During the hearing, the FTC also discussed the growing number
of merger reviews conducted each year. Chairman Pitofsky
testified that there were three times as many merger filings in
1999 as in 1991 and that the total value of assets acquired
through acquisition was 11 times as great as just 8 years
ago.\2\
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\2\ Id.
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The Committee also heard testimony regarding the FTC's
premerger review process. Under the Hart-Scott-Rodino Act (15
U.S.C. 18), merging companies of a certain size must file
premerger notifications with the Antitrust Division of the
Department of Justice and the FTC. The purpose of the Act is to
provide federal agencies with the opportunity to review mergers
for anti-competitive effects before they become final. The Act
also allows the agency to request more detailed information
through a second request process before approving a merger.
During the hearing the Committee heard testimony from several
antitrust experts expressing their concerns about the merger
review process and the second request process.
Attorneys representing the U.S. Chamber of Commerce and the
National Association of Manufacturers expressed their concerns
that the second request process is extremely burdensome and
requires reform. In short, they believe that in many instances
second requests are overly broad requiring the costly
production of documents that are not relevant to the review.
Albert Foer of the American Antitrust Institute testified
that the institute did not agree that the second request
process was overly burdensome. However, he stated that if
reforms are necessary the Committee should encourage the
agencies to build upon internal reforms perhaps creating a more
formally defined route for appeal within each agency
structure.\3\
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\3\ Hearing, Supra note 1 (testimony of Albert Foer of the American
Antitrust Institute).
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The Antitrust Section of the American Bar Association
recently reviewed the Hart-Scott-Rodino Act. In an April
report, the Section noted that while second requests are
generally less than 3 percent of all transactions, they are a
significant step increasing the costs to both the agency and
the parties.\4\ The report encouraged the agency to move
forward with internal reforms to the process and was supportive
of Congressional action to ensure that reforms were lasting and
practical.\5\
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\4\ Rep. of the Sec. Of the Antitrust Law on Proposed Hart-Scott-
Rodino Antitrust Improvement Act Amendments, A.B.A. Sec. Antitrust Law
11 (2000).
\5\ Id.
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Legislative History
On October 5, 1999, S. 1687 was introduced by Chairman
McCain. On February 9, 2000, Senator Ashcroft, Chairman of the
Subcommittee on Consumer Affairs, held a hearing on S. 1687. On
June 15, 2000, the bill was amended and reported from the
Committee.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 11, 2000.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1687, the Federal
Trade Commission Reauthorization Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
S. 1687--Federal Trade Commission Reauthorization Act of 2000
Summary: S. 1687 would authorize appropriations for the
Federal Trade Commission (FTC) for fiscal years 2001 and 2002.
The bill also would direct the FTC and the Department of
Justice (DOJ) to examine the process each agency uses to review
merging businesses and to eliminate reporting burdens,
duplication and delays where possible. Finally, the bill would
require the FTC and the DOJ to report on the burden to private
industry caused by the agencies' review of mergers.
Based on the historical spending patterns of the FTC, CBO
estimates that implementing S. 1687 would cost $339 million
over the 2001-2005 period. S. 1687 would not affect direct
spending or receipts; therefore, pay-as-you-go procedures would
not apply.
S. 1687 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: For this estimate
CBO assumes that the amounts authorized by the bill will be
appropriated near the start of each year. The estimated
budgetary impact of S. 1687 is shown in the following table.
The costs of this legislation fall within budget function 370
(commerce and housing credit).
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By fiscal year, in millions of dollars
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2000 2001 2002 2003 2004 2005
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SPENDING SUBJECT TO APPROPRIATION
Gross FTC spending under current law:
Estimated budget authority \1\.................. 125 3 0 0 0 0
Estimated outlays............................... 123 13 0 0 0 0
Proposed changes:
Authorization level............................. 0 162 177 0 0 0
Estimated outlays............................... 0 149 176 14 0 0
Gross FTC Spending Under S. 1687:
Authorization level............................. 125 165 177 0 0 0
Estimated outlays............................... 123 162 176 14 0 0
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\1\ The 2000 level is the gross amount appropriated for that year. Such spending is offset by collections of
fees that cover most of the agency's costs. The 2001 amount is the CBO estimate of the funds provided as an
advance appropriation for that year.
Basis of estimate: Companies considering merging with
another firm or acquiring another firm must file notice of
their intentions with the Federal Trade Commission (FTC).
Companies pay fees of $45,000 for each such filing. In 1999 and
2000, these collections were recorded as an offset to the
appropriated spending of the FTC and the Antitrust Division of
the Department of Justice, with one-half of the collections
credited to each agency. Each agency collected about $97
million in 1999. Because the FTC is authorized to collect and
spend these fees without further appropriation action, they are
not shown in the table.
S. 1687 would authorize appropriations for the FTC totaling
about $165 million in 2001 and $177 million in 2002. Based on
the historical spending pattern of the FTC, CBO estimates S.
1687 would cost $339 over the 2001-2005 period. Based on
information from the FTC, CBO estimates that the other
provisions would have no significant budgetary impact.
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: S. 1687
contains no intergovernmental or private sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Mark Hadley; Impact on
State, Local, and Tribal Governments: Shelley Finlayson; and
Impact on the Private Sector: Jean Wooster.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
While S. 1687 does not create any new programs, it does
require the FTC and the Department of Justice to review and
reform the merger review process. The purpose of the review is
to eliminate unnecessary burdens, costly duplication and undue
delay, in order to achieve a more effective and more efficient
merger review process. Since the purpose of the Act is to
streamline the process, the Committee does not expect the
legislation will have additional regulatory impact, or result
in additional reporting requirements for businesses regulated
by both agencies. In fact, the legislation could result in less
paperwork for businesses complying with the merger review
process. The legislation will have no further effect on the
number or types of individuals and businesses regulated, the
economic impact of such regulation, or the personal privacy of
affected individuals.
Summary of Major Provisions
S. 1687 will authorize the FTC at $164 million for fiscal
year 2001 and $177 million for fiscal year 2002. It would also
direct the FTC to work with the Attorney General to conduct an
internal review of the merger review process and make changes
to eliminate unnecessary procedures and streamline the process.
The FTC and the Attorney General would be directed to appoint
an official outside of the review process to review second
requests by the FTC and the Attorney General to ensure that the
information is not burdensome or duplicative. Finally, the bill
would require the agency as part of an existing annual report
to provide information which would help Congress measure the
effectiveness of the reforms.
Section-by-Section Analysis
Section 1. Short title
Section 1 provides that the bill may be cited as the
``Federal Trade Commission Reauthorization Act of 2000''.
Section 2. Reauthorization
Section 2 authorizes expenditures by the FTC of $164.6
million in FY 2001 and $177.46 in FY 2002.
Section 3. Information and documentary requests
Subsection (a) requires the Attorney General and the FTC to
designate a senior official not directly involved in the merger
review process to review second requests and hear petitions to
determine if the requested material is unreasonably burdensome
or duplicative and if the request has been fulfilled.
Subsection (b) directs the Attorney General and the FTC to
establish reasonable deadlines for expedited review of
petitions.
Subsection (c) directs the Attorney General and the FTC to
conduct an internal review of the merger review process and
implement reforms to eliminate unnecessary burdens and achieve
a more effective and efficient merger review process.
Subsection (d) requires the Attorney General and the FTC to
amend their respective guidelines and agency rules where
appropriate to implement the reforms developed from the review
within 129 days of enactment.
Subsection (e) requires the Attorney General and the FTC to
report to Congress on the reforms adopted, steps taken to
implement the reforms and the effect of the reforms within 180
days of enactment.
Section 4. Annual reports
Section 4 requires the Attorney General and the FTC to
include additional material to monitor the effectiveness of
these reforms in annual reports to Congress. The information
includes: the number of second request petitions filed; the
time it takes for parties to comply with a second request; the
number of petitions for review filed; the amount of material
submitted pursuant to second request; and the number of second
requests made but not complied with prior to resolution of the
case.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
FEDERAL TRADE COMMISSION ACT
[15 U.S.C. 57c]
authorization of appropriations
Sec. 25. There are authorized to be appropriated to carry out
the functions, powers, and duties of the Commission not to
exceed $92,700,000 for fiscal year 1994; not to exceed
$99,000,000 for fiscal year 1995; not to exceed $102,000,000
for fiscal year 1996; not to exceed $107,000,000 for fiscal
year 1997; [and] not to exceed $111,000,000 for fiscal year
[1998.] 1998: not to exceed $164,600,000 for fiscal year 2001;
and not to exceed $177,460,000 for fiscal year 2002.