Markets Wired

In testimony presented to the U.S. Senate Committee on Commerce, Science, and Transportation, the Federal Trade Commission described its work, and called for several changes to the FTC Act that would enhance its ability to protect consumers and promote competition.

FTC Chairwoman Edith Ramirez and Commissioners Maureen K. Ohlhausen and Terrell McSweeny testified before the Committee. In their written testimony, they estimated that the agency’s antitrust enforcement efforts have saved consumers over $3.4 billion, while its consumer protection actions have saved consumers $717 million.

The Commission called for repeal of the common carrier exception to the FTC Act, which prevents the FTC from taking action to protect consumers in some cases involving telecommunications firms and other common carriers.

“As the telecommunications and Internet industries continue to converge, the common carrier exception is increasingly likely to frustrate the FTC’s ability to stop deceptive and unfair acts and practices and unfair methods of competition with respect to a wide array of activities,” the Commission stated.

The Commission also recommended that the FTC’s jurisdiction be extended to non-profit entities.

In the testimony, the Commission described its consumer protection work over the last several years as including hundreds of new consumer protection cases, permanent injunctions, and orders for consumer redress and disgorgement of ill-gotten gains. Also, the agency has hosted dozens of policy workshops, conferences, and roundtables, and issued or updated more than 170 consumer and business education publications and videos.

The testimony notes that the FTC’s settlement with Volkswagen created a $10 billion consumer compensation fund to resolve allegations that the company unfairly sold cars with illegal defeat devices to cheat emissions tests. And its order against Herbalife required the multi-level marketing company to fully restructure its U.S. business operations, and pay $200 million to settle allegations that it deceived consumers into believing they could earn substantial money selling diet, nutritional supplements, and personal care products.

The testimony also noted that as part of its work to protect consumers’ privacy and data security, it secured this year a $100 million judgment against LifeLock, the agency’s largest data security judgment ever, settling allegations that the company violated a 2010 federal court order.

According to the testimony, protecting consumers as they use and benefit from new technologies and platforms has been a chief FTC priority in recent years. One recent case involved a project creator who raised money from consumers to produce a board game through a Kickstarter campaign, but used most of the funds on himself instead.

The Commission also issued an Enforcement Policy Statement and accompanying guidance on making the required disclosures when using native advertising, and it brought its first native advertising case against national retailer Lord & Taylor.

The testimony also summarized the FTC’s efforts in promoting competition. In the last two years alone, the testimony highlighted, the Commission has imposed conditions on 13 pharmaceutical industry mergers to ensure that these mergers did not harm competition. As a result, drug companies were required to divest of over a hundred branded and generic drugs used to treat a variety of conditions.

For nearly 20 years, the testimony noted, the Commission has sought to stop anticompetitive reverse-payment settlements of patent litigation in which the brand-name drug firm pays its potential generic rival to abandon a patent challenge and delay entering the market with a lower cost, generic product. The Supreme Court’s 2013 decision in FTC v. Actavis, Inc., strengthened the Commission’s position in bringing these types of cases. In June of last year, for example, the FTC obtained a landmark settlement in its litigation against Cephalon, Inc. when Cephalon’s parent, Teva Pharmaceuticals, agreed to stop using certain types of anticompetitive patent settlements and pay up to $1.2 billion in ill-gotten gains to reimburse drug wholesalers, pharmacies, insurers, and others who overpaid for the blockbuster sleep disorder drug Provigil.

The testimony also explained that the FTC organizes public workshops and issues reports on cutting-edge topics of interest to consumers, lawmakers, and regulators, including workshops on solar distributed generation and the “sharing” economy. The agency also is in the final stages of a landmark study of patent assertion entities, the testimony stated.

The Commission vote approving the testimony and its inclusion in the formal record was 3-0.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint. Like the FTC on Facebook, follow us on Twitter, read our blogs and subscribe to press releases for the latest FTC news and resources.