[Federal Register Volume 80, Number 115 (Tuesday, June 16, 2015)]
[Notices]
[Pages 34415-34422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14707]
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FEDERAL TRADE COMMISSION
Agency Information Collection Activities; Proposed Collection;
Comment Request
AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').
ACTION: Notice and request for comment.
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SUMMARY: The Commission plans to conduct a remedy study to update and
expand on the divestiture study it conducted in the mid-1990s to: (1)
Assess the effectiveness of the Commission's policies and practices
regarding remedial orders where the Commission has permitted a merger
but required a divestiture or other remedy, and (2) identify the
factors that contributed to the Commission successfully or
unsuccessfully achieving the remedial goals of the orders. This is the
second of two notices required under the Paperwork Reduction Act
(``PRA'') in which the FTC seeks public comments on its proposed study
in connection with Office of Management and Budget (``OMB'') review of,
and clearance for, the collection of information discussed herein.
DATES: Comments must be received on or before July 16, 2015.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Remedy Study, FTC File
No. P143100'' on your comment. File your comment online at https://ftcpublic.commentworks.com/ftc/hsrdivestiturestudypra2, by following
the instructions on the web-based form. If you prefer to file your
comment on paper, mail your comment to the following address: Federal
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW.,
Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment
to the following address: Federal Trade Commission, Office of the
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite
5610 (Annex J), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Daniel P. Ducore, Assistant Director,
202-326-2526, Compliance Division, Bureau of Competition, Federal Trade
Commission, Washington, DC 20580, or Timothy Deyak, Associate Director,
202-326-3742, Bureau of Economics, Federal Trade Commission,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background
Each year, the FTC, along with the Antitrust Division of the
Department of Justice, challenges a number of transactions that are
alleged to violate the antitrust laws. Most of these challenged
transactions are resolved through a consent order that remedies the
competitive concern. Taking advantage of its unique research and study
function, the Commission began a study in 1995, evaluating remedial
divestitures the Commission ordered from 1990 through 1994. The earlier
study focused on the thirty-five divestiture orders the Commission
issued over that four-year period. FTC staff interviewed thirty-seven
buyers out of the fifty that acquired divested assets. The study
yielded valuable information, which was synthesized, summarized, and
made available to the public in a
[[Page 34416]]
report in August 1999. The report is available at http://www.ftc.gov/sites/default/files/attachments/merger-review/divestiture.pdf.
The Commission refined and improved its divestiture orders partly
as a result of that study. Those improvements included shortening the
divestiture period, more often requiring up-front buyers, and requiring
monitors more frequently, particularly in divestitures in technology
and pharmaceutical industries. These changes were implemented almost
immediately, and the Commission and its staff still rely on the
findings from the study as they craft and enforce the Commission's
remedies.
Given the benefits resulting from the prior study, on January 16,
2015, the Commission published a Federal Register Notice (``FRN''), see
80 FR 2423, seeking comment under the PRA on a new FTC remedy study
that will focus on more recent orders, spanning the years 2006 through
2012, and will evaluate both structural and non-structural relief. In
response to the PRA Notice, the Commission received four comments
related to the proposed remedy study. These four comments are available
at https://www.ftc.gov/policy/public-comments/initiative-602.
II. FTC's Proposed Study
A. Study Description
Between the end of 1994 and 2013, the Commission issued 281 orders
in merger cases. Of those, the Commission proposes to study all ninety
orders issued from 2006 through 2012.\1\ The Commission chose this
period because it is sufficiently long ago to assess the order's impact
(i.e., whether divestiture orders created new competitors and whether
merger orders, including divestiture orders, achieved their remedial
goals), but recent enough so that participants will remember relevant
facts and events.
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\1\ The January 16, 2015 FRN stated that the study would include
92 orders. Two of those orders, C4231, In the Matter of Flow
International Corp., and C4299, In the Matter of Air Products and
Chemicals, Inc., relate to transactions that were abandoned.
Accordingly, those have been eliminated from the proposed remedy
study.
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Given the scope of the proposed study and to best use its
resources, the Commission will use different methodologies to evaluate
different orders. The Commission proposes to evaluate the majority of
the orders using a case study methodology similar to that used in the
earlier study, consisting of interviews with buyers of divested assets,
customers, and competitors, and seeking limited sales information from
the divestiture buyer and other major competitors. For orders relating
to supermarkets, drug stores, funeral homes, hospitals and other
healthcare clinics, the Commission proposes to study information from
divestiture buyers through voluntary questionnaires. For orders
relating to the pharmaceutical industry, the Commission proposes to
study information it already has, as well as publicly available
information.
The Commission proposes to use the case study methodology for
fifty-one of the ninety orders in the proposed study. The Appendix
identifies the fifty-one orders in chronological order based on the
date first accepted by the Commission. Of those fifty-one orders the
Commission issued during this period, forty-one required divestitures
to fifty-six different Commission-approved buyers.\2\ The Commission
proposes interviewing those fifty-six buyers and, on average, two other
significant competitors in each affected market, including the
respondent. Additionally, the Commission proposes to interview, on
average, two customers in each affected market. For the ten orders in
which the Commission ordered only non-structural relief, and where
there are therefore no buyers, the Commission proposes interviewing, on
average, two significant competitors in each affected market, including
the respondent, and, on average, two customers in each affected market.
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\2\ The January 16, 2015 FRN stated that the study would involve
47 different divestiture buyers. Upon further review, staff has
determined that 56 buyers purchased divested assets relating to the
orders included in the proposed study.
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Although the FTC will seek voluntary interviews in the first
instance, it may rely on compulsory process where necessary to obtain
the information needed for the study. Each interview will, to the
extent possible, be conducted by attorneys and economists who are
familiar with the relevant order from their work when it issued. Each
interviewer will use similar outlines for the interviews, focusing
broadly on the same topics. To the extent unique issues arise regarding
particular divestitures, the interviewer will pursue those issues as
well.
Although the buyer interviews will be similar to those in the
earlier study, staff will focus on several specific issues, some of
which address the changes made to the divestiture process based on the
earlier study. Those issues include:
Whether the increased use of buyers-up-front hindered the
buyer's ability to conduct adequate due diligence.
Whether shortening the divestiture period had any adverse
effect on the buyers or the process.
To what extent the staff's review of buyers and monitors
may have been inadequate.
Whether the orders have effectively defined the assets of
an autonomous business (when that was the purpose).
Whether assets outside of the relevant market have been
properly included in the divestiture package when necessary.
Whether Commission orders have effectively required
sufficient technical assistance or other nurturing provisions when
necessary.
Whether monitors have provided the oversight that the
circumstances warranted.
Whether the respondent impeded the buyer's ability to
compete in the market.
As noted above, in addition to interviewing buyers, the Commission
will also interview customers and other competitors, including the
respondent, in each affected market. The additional interviews will be
used, along with the buyer interviews, to assess further whether the
Commission's orders achieved their remedial goals. These interviews
will, where appropriate, cover some of the issues noted above, and
address some additional points, including:
Identification of the leading suppliers (and their market
shares) before and after the remedy.
Whether the buyer competed in a manner that was as
effective as the prior owner of the divested assets.
Whether any other significant changes occurred in the
market after the remedy was implemented (e.g., entry, exit, or other
merger).
The interviewee's views on how the merger would have
affected the competitive environment absent the remedy.
The interviewee's views about the market's competitiveness
before and after the merger and remedy.
In addition to conducting interviews, the FTC will require
information from each buyer and significant competitor, including the
respondent, in each market by issuing orders to file special reports
under its authority in Section 6(b) of the FTC Act. Information will be
sought from about 250 firms operating in approximately 190 distinct
product or geographic markets.\3\ For each of the markets identified in
the order, the
[[Page 34417]]
special reports will request annual unit and dollar sales data for
seven years, centered on the year the remedy took place.\4\ These data
are sufficiently limited in scope to enable the Commission to use them
in a timely and useful manner to supplement and complement information
received during the interviews.\5\
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\3\ This number is lower than the 280 participants estimated in
the January 16, 2015 FRN because, upon further review, staff has
determined that there are fewer significant competitors in the
markets affected by the 51 orders.
\4\ If the order became final in the first six months of the
year, then that year will be used as the year the remedy took place.
If the order became final in the last six months of the year, then
the following calendar year will be used as the year the remedy took
place.
\5\ If a company has fiscal year dollar and unit sales figures
that are not calendar year sales, it will be asked to describe its
fiscal year, to provide the data requested for the company's fiscal
years closest to the calendar years requested, to estimate the
requested calendar year dollar and unit sales, and to describe the
basis upon which those estimates were made. If the requested data
are not available for the product and the geographic market, the
company will be asked to estimate the dollar and unit sales data
requested and to describe the basis upon which its estimates were
made.
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The Commission proposes to use different methods to evaluate merger
orders in certain industries where the Commission has extensive
expertise crafting remedies: Supermarkets, drug stores, funeral homes,
hospitals and other healthcare clinics, and pharmaceuticals. Because of
this experience, the Commission uses well-established methods and
standard provisions tailored to each industry, and, accordingly, staff
is less likely to uncover any significant new information regarding the
structure of Commission remedies in these industries. As identified in
the Appendix, in those markets, the Commission issued fifteen orders
requiring over forty divestitures between 2006 and 2012. For these
orders, the Commission proposes sending voluntary questionnaires to the
buyers of the divested assets. Through the questionnaire, the
Commission intends to learn about the buyer's due diligence process,
the adequacy of the divestiture package and the transitional services,
and the buyer's post-divestiture operations. Staff will determine, on a
case-by-case basis, whether follow-up interviews with these buyers may
be necessary.
For the twenty-four orders that the Commission issued from 2006
through 2012 requiring divestitures in the pharmaceutical industry,
staff will synthesize information already in the Commission's
possession. The Bureau of Competition's Compliance Division maintains
close contact with the monitors appointed in these orders, and the
monitors and respondents file periodic reports as required by the
orders. As a result, the FTC has substantial information regarding the
competitive dynamics of these divested products. Staff will review the
information already in its possession and will follow-up with
interviews with the monitors, buyers, and customers as needed.
B. PRA Burden Analysis
In its January 16, 2015 FRN, the FTC provided PRA burden estimates
for the research. FTC staff is revising certain assumptions based on a
more precise calculation of the number of relevant orders, buyers, and
market participants in each order.
As described above, one component of the proposed study concerns
fifty-one merger orders approving fifty-six buyers of divested assets.
Commission staff will attempt to interview those buyers as well as, on
average, two customers and two competitors of each buyer in each
affected market. The number of interviews conducted for each will vary
based on the unique characteristics of each order. Ten of the fifty-one
orders required only non-structural relief, so there are no buyers for
those ten; the Commission proposes to interview, on average, two
customers and two competitors in each of those affected markets. In
several of the orders, the remedy applies to more than one relevant
geographic or product market, even though there may be only one buyer
of divested assets (or no buyer in the orders requiring only non-
structural relief). Because a single buyer may operate in more than one
geographic or product market, there may be different customers and
competitors in each of the different markets.
In the January 16, 2015 FRN, FTC staff preliminarily estimated that
there would be approximately ten orders implicating multiple markets
that require interviews with additional customers and competitors.
However, staff has now determined that because many of the same
entities compete or are customers in more than one of the markets
affected by a single consent, this number is actually smaller.
Consequently, approximately 300 interviews will be required, rather
than the 315 estimated in the January 16, 2015 FRN.
Commission staff expects that for each interview, two company
personnel will participate: Top-level managers (possibly the CEO or
president) and a marketing or sales manager. In addition, in many
cases, a company will likely request that its attorney also
participate. Staff anticipates that the interviews will last
approximately an hour to an hour-and-a-half, and that an hour of
preparation time for each interviewee and three hours for the attorney
may be required. Accordingly, the estimated total time involved for
this portion of the study will be 2,850 hours [300 interviews x (4.5
interview hours + 5 preparation time hours)].
Based on external wage data, the estimated hourly wages for the
expected participants are:
CEO $655
Sales/Marketing Manager $215
Attorney $135
If all three individuals participate for each firm, total wage
costs for each firm, rounded, will be approximately $2,783 [($655 x
2.5) + ($215 x 2.5) + ($135 x 4.5)]. If FTC staff interviews 300
different entities, the estimated total labor cost for this part of the
study will be $834,900 [300 x $2,783].
As another component of the study, the FTC proposes sending brief
questionnaires to the approximately forty buyers of divested assets in
the fifteen orders issued from 2006 through 2012 requiring the
divestiture of supermarkets, drug stores, funeral homes, or hospitals
and other healthcare clinics. Commission staff estimates that the CEO
or other top-level manager and a marketing or sales manager will spend
one and two hours, respectively, to complete the questionnaire,
followed by approximately three hours for attorney review. The
estimated total time involved for three participants in this part of
the study will be 240 hours [40 participants x 6 hours]. Commission
staff anticipates that respondents will incur primarily labor costs to
complete the questionnaire, with total wage costs for each firm
estimated at $1,490 [$655 + ($215 x 2) + ($135 x 3)]. Staff anticipates
obtaining completed questionnaires from the approximately forty buyers,
resulting in total labor costs of $59,600 [40 x $1,490].
As the final component of this study, the FTC proposes obtaining
and analyzing sales data to complement the information obtained in the
interviews and to aid in the overall assessment of whether the orders
achieved their remedial goals. As noted above, for each of the markets
remedied by each order, the FTC will issue orders to file special
reports requesting seven years of annual sales data (in units and
dollars), centered on the year in which the order became final, for all
significant competitors in each remedied market. For most firms, these
data are likely maintained as a part of their normal course of business
and the request should not pose a significant burden. While the
majority of these fifty-one remedied matters involve only a single
market, others implicate multiple
[[Page 34418]]
geographic and product markets. The FTC anticipates sending orders to
file special reports to competitors in approximately 190 product and
geographic markets, and that approximately 250 market competitors will
receive the orders. FTC staff estimates that three people will be
involved in the response to each order to file special report and that
the total time involved in responding to each report will be ten hours.
Accordingly, the total amount of time involved for the participants in
this part of the study will be approximately 2,500 hours [250 orders to
file special reports x 10 hours/report].
The majority of the costs incurred for compliance with the orders
to file special reports will be labor costs. FTC staff anticipates that
a top-level financial manager, an accountant or financial analyst, and
an attorney will be involved in any discussions relating to the special
reports and in responding to the orders to file special reports.
Specifically, FTC staff anticipates that each of these individuals
would be involved in a two-hour discussion with staff prior to
compliance, and that the financial analyst would require four hours to
compile the data. Based on external wage data, the estimated hourly
wages for the expected participants are:
Financial Manager $75
Accountant $55
Attorney $135
Total labor costs for each special report will be $750 [($75 x 2) +
($135 x 2) + ($55 x 6)]. If the Commission issues 250 orders to file
special reports, the total labor cost of complying with compulsory
process will be $187,500 [250 x $750]. Commission staff anticipates
minimal capital or other non-labor costs.
III. Confidentiality
Some of the information the Commission will receive in connection
with the study is information of a confidential nature. Under Section
6(f) of the FTC Act, such information is protected from public
disclosure for as long as it qualifies as a trade secret or
confidential commercial or financial information. 15 U.S.C. 46(f).
Material protected by Section 6(f) also would be exempt from disclosure
under the Freedom of Information Act, 5 U.S.C. 552. Moreover, under
Section 21(c) of the FTC Act, a submitter who designates information as
confidential is entitled to 10 days' advance notice of any anticipated
public disclosure by the Commission, assuming that the Commission has
determined that the information does not, in fact, constitute Section
6(f) material. 15 U.S.C. 57b-2(c). Although materials covered by these
sections are protected by stringent confidentiality constraints, the
FTC Act and the Commission's rules authorize disclosure in limited
circumstances (e.g., official requests by Congress, requests from other
agencies for law enforcement purposes, and administrative or judicial
proceedings). Even in those limited contexts, however, the Commission's
rules may afford protections to the submitter, such as advance notice
to seek a protective order prior to disclosure in an administrative or
judicial proceeding. See 15 U.S.C. 57b-2(c); 16 CFR 4.9-4.11.
IV. Analysis of Comments
As referenced above, in response to the January 16, 2015 FRN, the
Commission received four comments related to the proposed study. A
majority of the commenters support the need for the FTC's proposed
study and recognize the importance of the modifications that the
Commission has implemented, largely as a result of its prior study of
merger orders. Each commenter, however, suggests what he or she views
as improvements to the proposed study.
Kenneth Davidson, a former FTC staff attorney who, as he noted, was
significantly involved in the design and implementation of the earlier
study, suggests that the Commission narrow the scope of the study to
focus on whether the recommendations of the prior study have been
implemented in more recent orders and, in orders in which they have
not, whether the failure to do so had an impact on the effectiveness of
the remedy. Dr. John Kwoka, a professor of economics at Northeastern
University, and the American Antitrust Institute (``AAI''), a non-
profit advocacy group that focuses on antitrust issues, both suggest
that the Commission expand the study significantly and question whether
the scope of the data to be collected will be sufficient. Finally, the
Electronic Privacy Information Center (``EPIC''), a non-profit advocacy
group that focuses on privacy issues, recommends a shift in the focus
of the study to include privacy issues, a topic not studied in the
prior study and not addressed in the orders proposed to be studied.
Each comment is described in more detail below, and Commission
responses follow.
A. Kenneth Davidson Comment
Mr. Davidson supports further study of remedies but has several
concerns regarding the structure of the proposed study. First, he
believes any further study should be voluntary and anonymous, as the
earlier study was. He believes much of the valuable information
disclosed in the earlier interviews was made available because of the
voluntary, confidential nature of the interview. Mr. Davidson suggests,
as an alternative to the proposed interviews, that in future orders the
Commission require buyers of divested assets to file compliance
reports. Second, he describes the study as relying ``primarily on the
enforcement attorney and the economist who investigated the antitrust
violation'' and asserts that such reliance may result in biased and
inconsistent results. He instead recommends using two or three
Compliance Division attorneys and the same number of economists to
provide expertise and assure more consistency, similar to the structure
used in the prior study.
Mr. Davidson also believes the number of orders included in the
study imposes too much burden on limited resources and recommends
selecting a smaller subset of divestitures to study, starting with
those identified as problematic. In particular, he urges that the study
focus on the orders in which the changes recommended by the prior study
were not implemented to determine whether that may have led to problems
with the remedy. Mr. Davidson suggests several considerations for the
interviews, including requesting a timeline of milestones for the
entire process from both the buyer of the divested assets and the
seller to help assess the pacing of divestitures. Finally, Mr. Davidson
contends that the requested data will have limited use and questions
the value of using the Commission's compulsory process authority to
obtain it. He suggests, instead, that profits or costs might be better
measures of competitive impact; however, he acknowledges the difficulty
in obtaining consistent data allowing for reliable comparisons. He
recommends that the Commission consider voluntary submissions of data,
rather than using compulsory process. He also recommends that the
Commission provide greater detail about how the data will be used.
Commission Response
1. The confidential information of participants will be protected.
Section 6(f) of the Federal Trade Commission Act protects
confidential information from public disclosure for as long as it
qualifies as a trade secret or confidential commercial or financial
information. 15 U.S.C. 46(f). In issuing
[[Page 34419]]
any report on the study, the Commission will take appropriate steps to
protect such information or to give notice before any public disclosure
of such information, as specified further below. Accordingly, we do not
anticipate that the use of compulsory process here will affect the
quality of responses received.
2. Because of the importance of the sales data requested, the
Commission has decided to use its authority under Section 6(b) of the
FTC Act to require submission of the data.
Although FTC staff agrees that the prior study yielded valuable
information, very little of the financial data that FTC staff requested
from participants on a voluntary basis in the prior study was
submitted, as Mr. Davidson acknowledges. The proposed study is designed
to obtain sales data from each buyer and significant competitors.
Because of the potential value of that information and the need to
obtain that information from market participants, the Commission has
decided to compel its production under Section 6(b) of the Federal
Trade Commission Act to ensure that participants provide the desired
information.
3. Attorneys and economists who were involved in the initial
investigation will add significantly to the evaluation of the
Commission's remedies, and their participation will enable the FTC
staff to complete the interview component of the study in a timely
manner.
The study will engage teams of experienced professionals to conduct
the interviews, including, where possible, the enforcement attorney and
economist who conducted the antitrust investigation of the underlying
merger, the Compliance Division attorney who handled the remedy aspect,
and a paralegal or research analyst. The attorneys and economists who
were involved in the initial investigation will bring significant
knowledge of the industry and the parties to the process and will use
that background to add significantly to the quality of the interviews.
In addition, FTC staff supervising the overall study, who were not
involved in the initial investigation, will attend the interviews.
Relying on multiple teams, including the investigative staff, to
conduct the interviews will enable FTC staff to complete the interviews
more quickly and effectively than relying solely on Compliance Division
staff.
An initial meeting will be held with each case team prior to the
interviews to review the issues raised by the remedy. Consistency will
be maintained from interview to interview by relying on standardized
outlines prepared by FTC staff, which will be adapted for the order and
markets at issue consistent with the issues discussed at the initial
meeting. Mr. Davidson points out several interesting topics for the
interviews, and FTC staff has added them to the interview outlines.
Obtaining timeline information where possible will help the Commission
determine whether its timing assumptions are correct.
Mr. Davidson is concerned that the scope of the study may tax the
Commission's resources, but the study is structured to meet its goals
without placing undue burden on participants or Commission resources.
The Commission believes that the scope of the study is manageable,
particularly as structured in the manner described. The Commission
further believes that limiting the study to only remedies raising
concerns, as Mr. Davidson suggests, would limit the learning. Valuable
lessons for the Commission's mission may be derived equally from
successful and unsuccessful remedies alike.
Finally, Mr. Davidson believes that the annual dollar and unit
sales information will be of limited value beyond confirming claims of
the buyers that they are participating in the market. He suggests it
may be difficult to compare before and after divestiture performance
and that additional investigation will be needed to understand the
data. The Commission believes, however, that the data will be useful in
confirming those claims of the buyers. More generally, combining this
information with the qualitative information obtained through the
interviews will enable the Commission to assess whether the order has
achieved its remedial goals.
B. Dr. John Kwoka and AAI Comments
Dr. Kwoka and AAI offer similar suggestions for improving the
study. First, Dr. Kwoka suggests that the Commission state more clearly
the criteria for a successful remedy. He states that ``[t]he criterion
for a successful remedy is that it preserve or restore the competition
that would otherwise be lost as a result of the merger being
approved.'' Next, Dr. Kwoka suggests that the Commission consider
adding some pre-2006 orders, especially orders that required only non-
structural relief. He also is concerned that the study too heavily
relies on information obtained in the interview portion of the study,
and notes that interviews are not being conducted in all components of
the study. Dr. Kwoka questions that failure to adhere to the same
methodology throughout the study, which could lead some readers to find
the results less convincing. He also suggests that the Commission
consider collecting information beyond the sales data it will be
collecting, including information on non-price variables such as
expenditures on research and development. He suggests that the
Commission use a more flexible time frame that may vary with each
order, because the proposed seven-year time frame may not be the most
appropriate time frame for each remedy. Finally, he suggests that the
Commission obtain information about monitors and trustees, particularly
the procedures used by these third parties, the contractual
arrangements, the costs imposed by their use, and their effectiveness.
AAI also suggests providing a clearer articulation of the criteria
for evaluating a successful remedy. Like Dr. Kwoka, AAI suggests that
the appropriate standard for determining a successful remedy is whether
the remedy ``fully restore[s] competition that would otherwise be lost
as a result of an anticompetitive merger.'' AAI asserts that without a
clearly articulated standard the design of the proposed study will
merely validate the conclusions of the prior study. AAI also suggests
expanding the number of orders studied to include all orders the
Commission has issued since the prior study as well as Department of
Justice merger decrees. In addition, AAI suggests that FTC staff study
the effects of mergers that the Commission did not remedy. AAI also
recommends expanding the time period covered by the study in order to
capture more remedies in which the Commission required non-structural
relief. AAI urges that the FTC staff also interview firms that have
exited or never entered the market because the design relies too
heavily on interviews of current participants in the markets of concern
to the Commission. Like Dr. Kwoka, AAI believes that the portion of the
study designed to evaluate divestitures in the pharmaceutical industry
and of supermarkets, drug stores, funeral homes, and hospitals and
other healthcare clinics is too narrow. Regarding the data collection,
AAI believes that the seven-year time frame may not be the correct
choice in certain cases, and that the Commission should also seek non-
price metrics, such as quality and reliability.
Commission Response
1. The Commission agrees that an appropriate standard by which we
[[Page 34420]]
evaluate the effectiveness of each remedy is necessary, and has
articulated clear criteria consistent with that suggested by the
commenters.
The prior study focused on whether the buyer of the divested assets
obtained the assets it needed and whether it competed in the market of
concern to the Commission after the divestiture. There was some
criticism at the time that the study did not go further to evaluate
whether the remedy achieved the remedial goal of the order. The
proposed study addresses that criticism and has been designed to
``assess whether divestiture orders created new competitors and whether
merger orders, including divestiture orders, achieved their remedial
goals.''
The criteria the FTC uses to determine if a remedy is acceptable
are spelled out in case law, as well as the Bureau of Competition's
Statement on Negotiating Merger Remedies, which states: ``an acceptable
remedy must [. . .] maintain or restore competition in the markets
affected by the merger.'' \6\ The Bureau of Competition's Frequently
Asked Questions About Merger Consent Order Provisions similarly
explains, ``Every order in a merger case has the same goal: To preserve
fully the exiting competition in the relevant market or markets.'' \7\
The predictive nature of Clayton Act Section 7 enforcement requires the
FTC to look to the facts and evidence specific to each case in
determining whether a remedy fully maintains or restores existing
competition in any particular matter. The overriding goal is always the
same: As the Supreme Court has stated, restoring competition is the
``key to the whole question of an antitrust remedy.'' \8\ These
criteria are consistent with the commenters' recommendations.
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\6\ Statement of the Federal Trade Commission's Bureau of
Competition on Negotiating Merger Remedies, available at https://www.ftc.gov/tips-advice/competition-guidance/merger-remedies. See
also Ford Motor Co. v. United States, 405 U.S. 562, 573 (1972)
(``The relief in an antitrust case must be `effective to redress the
violations' and `to restore competition.' . . . Complete divestiture
is particularly appropriate where asset or stock acquisitions
violate the antitrust laws.'').
\7\ Federal Trade Commission, Bureau of Competition, Frequently
Asked Questions About Merger Consent Order Provisions, available at
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/merger-faq.
\8\ United States v. E.I. du Pont de Nemours & Co., 366 U.S.
316, 326 (1961).
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2. Expanding the study to cover more orders is unlikely to improve
the quality of the information learned, especially when considering the
additional burden imposed on the public.
Studying a subset of the universe of orders that the Commission has
issued since the last study permits the FTC to complete the study in a
timely manner without imposing an undue burden on participants in the
study. As proposed, this study is more comprehensive and includes more
merger orders for study than the Commission's prior study, which itself
yielded valuable information that led to important changes to the
Commission's process. The Commission believes that expanding the number
of orders studied beyond that proposed is unlikely to improve the
quality of the information obtained or the ability to draw reliable,
useful conclusions to a sufficient degree to warrant the added burden
on the participants and the Commission. On the other hand, to complete
this more comprehensive study, the Commission will rely on the
expertise and experience of its staff, many of whom helped with the
underlying merger investigation. This experience allows the Commission
to limit the burden on outside parties for the orders not included in
the interview portion of the study.
3. The data component has been purposefully designed to minimize
the burden on participants as much as possible while providing
quantitative evidence that will complement and supplement the
information obtained through the interviews.
This study differs from the prior study primarily in its use of the
Commission's Section 6(b) authority to issue orders to file special
reports. The Commission anticipates sending orders to as many as 250
participants, requesting annual unit and sales data for a seven-year
period. These data will supplement and complement the interview
information for assessing whether the Commission's orders achieved
their remedial goals. The Commission believes that requesting this
limited type of data over a seven-year time period will provide useful
information for the study, but minimize the burden on recipients of the
orders.
C. EPIC Comment and FTC Staff Response
EPIC is an advocacy group that focuses on privacy issues and
protecting consumers' privacy rights. EPIC recommends that the
Commission review past mergers of data aggregators with a focus on non-
price factors such as data collection and the merger's impact on
consumer privacy. EPIC identifies a series of such mergers that the
Commission has reviewed, but for which it has imposed no conditions
relating to privacy issues (AOL's acquisition of Time Warner), or not
imposed conditions at all (Double Click's acquisition of Abacus,
Google's acquisition of Double Click, and Facebook's acquisition of
WhatsApp). EPIC recommends that the Commission study the effects of
those mergers on privacy rights.
Although EPIC raises very important issues, these questions go
beyond the scope of the proposed study, which focuses on the remedies
that the Commission has actually imposed rather than on issues or
mergers where it determined that no remedy was warranted.
V. Request for Comment
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before July 16, 2016.
Write ``Remedy Study, P143100'' on your comment. Your comment--
including your name and your state--will be placed on the public record
of this proceeding, including, to the extent practicable, on the public
Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a
matter of discretion, the Commission tries to remove individuals' home
contact information from comments before placing them on the Commission
Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
. . . which is privileged or confidential,'' as provided in Section
6(f) of the FTC Act, 15 U.S.C. Sec. 46(f), and FTC Rule 4.10(a)(2), 16
CFR 4.10(a)(2). In particular, do not include competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you must follow the procedure explained in
FTC Rule 4.9(c), 16 CFR
[[Page 34421]]
4.9(c).\9\ Your comment will be kept confidential only if the FTC
General Counsel grants your request in accordance with the law and the
public interest.
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\9\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/hsrdivestiturestudypra2, by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
If you file your comment on paper, write ``Remedy Study, P143100''
on your comment and on the envelope, and mail it to the following
address: Federal Trade Commission, Office of the Secretary, 600
Pennsylvania Avenue NW., Suite CC-5610 (Annex J), Washington, DC 20580,
or deliver your comment to the following address: Federal Trade
Commission, Office of the Secretary, Constitution Center, 400 7th
Street SW., 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If
possible, submit your paper comment to the Commission by courier or
overnight service.
The FTC Act and other laws that the Commission administers permit
the collection of public comments to consider and use in this
proceeding as appropriate. The Commission will consider all timely and
responsive public comments that it receives on or before July 16, 2015.
For information on the Commission's privacy policy, including routine
uses permitted by the Privacy Act, see http://www.ftc.gov/ftc/privacy.htm. For supporting documentation and other information
underlying the PRA discussion in this Notice, see http://www.reginfo.gov/public/jsp/PRA/praDashboard.jsp.
Comments on the information collection requirements subject to
review under the PRA should additionally be submitted to OMB. If sent
by U.S. mail, they should be addressed to Office of Information and
Regulatory Affairs, Office of Management and Budget, Attention: Desk
Officer for the Federal Trade Commission, New Executive Building,
Docket Library, Room 10102, 725 17th Street NW., Washington, DC 20503.
Comments sent to OMB by U.S. postal mail, however, are subject to
delays due to heightened security precautions. Thus, comments instead
should be sent by facsimile to (202) 395-5806.
Appendix
Interviews and special orders requesting sales data
------------------------------------------------------------------------
Date first accepted by the
commission Docket No. Matter name
------------------------------------------------------------------------
1. 04/20/06....................... C 4164 Boston Scientific
Corp/Guidant Corp.
2. 07/07/06....................... C 4165 Hologic, Inc./
Fischer Imaging.
3. 07/18/06....................... C 4163 Linde/BOC.
4. 08/18/06....................... C 4173 EPCO/TEPPCO.
5. 10/03/06....................... C 4188 The Boeing Company/
Lockheed Martin
Corp.
6. 10/17/06....................... C 4170 Thermo Electron/
Fisher Scientific.
7. 12/28/06....................... C 4181 General Dynamics
OTS.
8. 01/25/07....................... C 4183 Kinder Morgan Inc.
9. 08/09/07....................... C 4196 Jarden Corporation/
K2, Inc.
10. 09/15/07...................... C 4202 Fresenius AG/
American Renal
Association.
11. 10/09/07...................... C 4201 Kyphon, Inc./Disc-o-
tech.
12. 10/26/07...................... C 4210 Compagnie de Saint-
Gobain/Owens
Corning.
13. 04/28/08...................... C 4228 Talx Corporation.
14. 05/05/08...................... C 4219 Agrium Inc./UAP
Holding
Corporation.
15. 06/30/08...................... C 4233 Carlyle Partners/JP
Morgan.
16. 07/17/08...................... C 4224 Pernod Ricard/V&S
Spirits.
17. 07/30/08...................... C 4225 McCormick & Company/
Unilever Group.
18. 09/15/08...................... C 4236 Fresenius SE/Daiichi
Sankyo.
19 09/16/08....................... C 4257 Reed Elsevier PLC/
ChoicePoint Inc.
20. 12/23/08...................... C 4244 Inverness Medical
Innovations, Inc./
ACON.
21. 01/23/09...................... C 4243 Dow Chemical/Rohm &
Haas.
22. 01/29/09...................... C 4251 Getinge AB/Datascope
Corp.
23. 02/26/09...................... C 4254 Lubrizol/Lockhart
Chemical.
24. 04/02/09...................... C 4253 BASF/Ciba Specialty
Chemicals.
25. 09/25/09...................... C 4273 K&S AG/Dow Chemical.
26. 11/24/09...................... C 4274 Panasonic/Sanyo.
27. 01/27/10...................... C 4283 Danaher Corp/MDS.
28. 02/26/10...................... C 4301 PepsiCo Inc./Pepsi
Bottling.
29. 05/07/10...................... D 9342 MDR (The Dunn &
Bradstreet Corp)/
QED.
30. 05/14/10...................... C 4292 Varian, Inc./
Agilent, Inc.
31. 06/30/10...................... C 4293 Pilot/Flying J.
32. 07/14/10...................... C 4297 AEA Investors/
Wilh.Werhahn.
33. 07/16/10...................... C 4300 Fidelity/
LandAmerica.
34. 07/28/10...................... C 4298 NuFarm/A.H. Marks
Holdings, Ltd.
35. 09/27/10...................... C 4305 Coca-Cola/Coca-Cola
Enterprise.
36. 10/11/10...................... C 4307 Simon Property Group/
Prime Outlets.
37. 12/29/10...................... C 4314 Keystone/Compagnie
de Saint-Gobain.
38. 05/26/11...................... C 4328 Irving/Exxon Mobil.
39. 10/28/11...................... C 4340 IMS Health/SDI
Health.
40. 12/08/11...................... C 4341 LabCorp/Orchid
Cellmark.
41. 01/11/12...................... C 4346 Amerigas/ETP.
42. 02/29/12...................... C 4349 Carpenter/HHEP-
Latrobe.
43. 03/05/12...................... C 4350 Western Digital/
Hitachi.
44. 04/26/12...................... C 4368 CoStar/Loopnet.
[[Page 34422]]
45. 05/01/12...................... C 4355 Kinder Morgan/El
Paso.
46. 06/11/12...................... C 4363 Johnson & Johnson/
Synthes.
47. 08/06/12...................... C 4366 Renown Health/Reno
Heart Physicians.
48. 10/12/12...................... C 4381 Magnesium Elektron.
49. 10/31/12...................... C 4380 Corning, Inc.
50. 11/15/12...................... C 4376 Hertz Global
Holdings.
51. 11/26/12...................... C 4377 Robert Bosch.
------------------------------------------------------------------------
Questionnaires
------------------------------------------------------------------------
Supermarkets and drug stores
------------------------------------------------------------------------
1. 06/04/07....................... C 4191 Rite Aid/Eckerd.
2. 06/05/07....................... D 9324 Whole Foods.
3. 11/27/07....................... C 4209 A&P/Pathmark.
4. 08/04/10....................... C 4295 Topps.
5. 06/15/12....................... C 4367 Giant/Safeway.
------------------------------------------------------------------------
Funeral homes
------------------------------------------------------------------------
6. 11/22/06....................... C 4174 SCI/Alderwoods.
7. 11/24/09....................... C 4275 SCI/Palm.
8. 3/25/10........................ C 4284 SCI/Keystone.
------------------------------------------------------------------------
Hospitals and other clinics
------------------------------------------------------------------------
9. 03/30/06....................... C 4159 Fresenius AG.
10. 10/07/09...................... D 9338 Carilion Clinic.
11. 11/25/10...................... C 4309 Universal/PSI.
12. 07/21/11...................... C 4339 Cardinal/Biotech.
13. 09/02/11...................... C 4334 Davita/DSI.
14. 02/28/12...................... C 4348 Fresenius AG.
15. 10/5/12....................... C 4372 Universal/Ascend.
------------------------------------------------------------------------
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-14707 Filed 6-15-15; 8:45 am]
BILLING CODE 6750-01-P