[Billing Code: 6750-01P]
FEDERAL TRADE COMMISSION
Remedial Use of Disgorgement
AGENCY: Federal Trade Commission
(FTC or Commission).
ACTION: Notice; request for
comments.
SUMMARY: The Commission is
requesting comments on the use of disgorgement as a remedy for violations
of the Hart-Scott-Rodino (HSR) Act, FTC Act and Clayton Act.
DATE: Comments must be received by
March 1, 2002.
ADDRESS: Public comments are
invited, and may be filed with the Commission in either paper or
electronic form. An original and one (1) copy of any comments filed in
paper form should be submitted to the Document Processing Section, Office
of the Secretary, Room 159-H, Federal Trade Commission, 600 Pennsylvania
Avenue, N.W., Washington, D.C. 20580. If a comment contains nonpublic
information, it must be filed in paper form, and the first page of the
document must be clearly labeled "confidential." Comments that do not
contain any nonpublic information may instead be filed in electronic form
(in ASCII format, WordPerfect, or Microsoft Word) as part of or as an
attachment to email messages directed to the following email box:
disgorgementcomment@ftc.gov.
FOR FURTHER INFORMATION CONTACT:
John Graubert, Office of General Counsel, FTC, 600 Pennsylvania Avenue,
N.W., Washington, D.C. 20580, (202) 326-2186, jgraubert@ftc.gov.
SUPPLEMENTARY INFORMATION: The
Commission has considerable experience with the use of monetary equitable
remedies in consumer protection cases. In contrast, the Commission has
considered disgorgement or other forms of monetary equitable relief in
fewer competition matters and obtained disgorgement in two recent matters,
FTC v. Mylan Laboratories, et al. and FTC v. The Hearst Trust et
al. The Commission accordingly solicits comments on the factors the
Commission should consider in applying this remedy and how disgorgement
should be calculated. The Commission is not re-examining its statutory
authority to seek disgorgement or other monetary equitable relief in
competition cases.
Comments may address any or all of the
following questions. However, other, related comments are also welcome:
- 1. Are there particular violations of
the Clayton Act, the HSR Act, the competition provisions of the FTC Act,
or final orders of the Commission in competition cases where
disgorgement would be especially appropriate or, in contrast, less
useful? Should the resort to disgorgement depend on whether, in
conjunction with an HSR Act violation or order violation, the underlying
transaction or conduct constitutes an illegal acquisition under section
7 of the Clayton Act, or constitutes monopolization or attempted
monopolization under section 5 of the Federal Trade Commission Act?
-
- 2. How should the Commission calculate
the amount of disgorgement appropriate for particular law violations
under each of the statutes? For example, if the Commission sought
disgorgement for violations of the HSR Act, how should disgorgement be
calculated when the unlawful gain includes (or consists solely of) tax
savings, stock market profits, or other gain not directly related to
antitrust injury? Should disgorgement be calculated to remove all
profits earned from the acquisition, all profits attributable to
antitrust harm, or some other approach? How should the Commission assess
benefits obtained in an unlawful acquisition, or other transaction, that
do not flow directly from immediate injury to customers, e.g.,
where the violator reduces its investments in future technology because
of a reduction in the competition it faces? Is the approach used to
calculate disgorgement in S.E.C. v. First City Financial Corporation,
Ltd., 890 F.2d 1215 (D.C. Cir. 1989), appropriate for the
Commission's use?
-
- 3. What other factors should the
Commission consider in determining whether to seek disgorgement? How
should the Commission weigh and what is the relevance to the Commission
of the following factors in determining whether to seek disgorgement: (i)
the impact that seeking such a remedy may have on other aspects of any
settlement negotiations, e.g., delay in obtaining divestiture or
other structural relief; (ii) the adequacy of other forms of relief
(including civil penalties); (iii) the egregiousness of the conduct at
issue; (iv) the extent of harm to the market generally or to indirect
purchasers who may be unable to pursue a claim; (v) the ability of an
affected party to secure relief independently of the Commission, e.g.,
by private actions; (vi) the advantages or disadvantages of litigation
in federal court rather than in an administrative proceeding; and (vii)
the possible tradeoff between addressing past harm more thoroughly
(through disgorgement) and an interest in obtaining relief quickly
(through a conduct or structural remedy) so as to limit the effects of a
continuing violation?
-
- 4. Should pending or potential private
litigation, actions by state attorneys general, or civil or criminal
prosecution by the Antitrust Division of the Department
of Justice, affect the Commission's decision to seek disgorgement? Is
this decision any different from the Commission's decision to seek other
equitable relief, e.g., divestiture, in cases where other related
private or public litigation exists or is possible? Will Commission
disgorgement claims encourage or discourage the decision of private
parties or states to bring or continue litigation, or settlement
negotiations, in such cases? If so, what would the ultimate effect on
consumer welfare be under each such scenario?
-
- 5. In light of the fact that
disgorgement and restitution have distinct theoretical underpinnings and
equitable rationales, are there circumstances in competition cases in
which one or the other of these remedies is more appropriate? What are
the considerations that should inform such decisions?
-
- 6. When and how should disgorgement
funds recovered by the Commission be distributed as restitution when
there is parallel private litigation? For example,
should any recovery of disgorgement or restitution by the Commission
affect the calculation of or be used to pay attorney's fees in parallel
litigation, and, if so, in what way? In any restitution program, how
should direct and indirect purchasers be treated? How should the
Commission proceed if its own action and parallel private action are not
consolidated before a single judge?
The Commission is also interested in
learning about parties' experiences in analogous circumstances involving
disgorgement with other federal or state agencies and in other enforcement
areas.
By direction of the Commission.
Donald S. Clark
Secretary
DATE: December 19, 2001 |