Federal Trade Commission Act Amendments of 1989

Federal Trade Commission Act Amendments of 1989 - Amends the Federal Trade Commission Act to deny authority to the Federal Trade Commission (FTC) to find a method of competition unfair (in any action under the Sherman Act) if such method of competition would be held to constitute State action.

Denies the FTC authority to: (1) study, investigate, or prosecute agricultural cooperatives for any action not in violation of antitrust Acts; or (2) study or investigate agricultural marketing orders.

Repeals the authority of the FTC to pay attorneys fees, expert witness fees, and other costs of participating in a rulemaking proceeding.

Prohibits the FTC from instituting a civil action, in cases involving consent orders, to obtain civil penalties for unfair or deceptive acts or practices.

Permits a district court to review certain FTC determinations of law which found an act or practice unfair or deceptive.

Permits the FTC to issue a notice of proposed rulemaking for certain rules only where it has reason to believe that the unfair or deceptive acts or practices are prevalent.

Revises the effective dates for cease and desist orders issued by the FTC.

Applies FTC civil investigative demand procedures only to acts, practices, or methods of competition declared unlawful by a law administered by the Commission.

Requires that an unfair act or practice must be likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.

Denies FTC authority to initiate any new rulemaking proceeding which results in a rule prohibiting commercial advertising on the basis that such advertising constitutes an unfair act or practice in or affecting commerce.

Authorizes the court to: (1) summon any person, partnership, or corporation without regard to whether they reside or transact business in the district in which the suit is brought; and (2) serve process in any district. Specifies requirements for the service of process.

Authorizes the FTC to serve civil investigative demands to obtain physical evidence (under current law, restricted to documentary material) relevant to unfair or deceptive practices.

Directs the FTC to submit semiannual reports in FY 1990 through 1992 to specified congressional committees on instances in which resale price maintenance or predatory pricing practices have been suspected or alleged.

Directs the FTC to submit to appropriate congressional committees a report describing complaints made, investigations undertaken, recommendations and opinions given, and consent agreements and other dispositions made by the FTC. Requires that such report shall also contain a statement of the reasons for the termination of any matter.

Directs the FTC to report to specified congressional committees on instances in which predatory pricing practices in such industries have been suspected or alleged.

Prohibits the FTC from intervening in the proceedings of any Federal or State agency without first notifying specified congressional committees at least 60 days in advance, or as soon as practicable.

Authorizes appropriations for FY 1990 through 1992.

Directs the FTC to: (1) conduct an evaluation of the level of its personnel resources and the manner in which such resources are allocated and to submit the results to specified congressional committees; and (2) review its statutory responsibilities to identify matters within its jurisdiction where Federal enforcement is particularly necessary or desirable and those areas that might more effectively be enforced at the State or local level and to submit such information together with specific recommendations for greater Federal-State cooperation to such committees.

 
Calendar No. 249
101st CONGRESS
1st Session
S. 1249
[Report No. 101-135]
A BILL
To amend the Federal Trade Commission Act to provide authorization of
appropriations, and for other purposes.
September 18, 1989
Reported without amendment
S 1249 RS
Calendar No. 249
101st CONGRESS
1st Session
S. 1249
[Report No. 101-135]
To amend the Federal Trade Commission Act to provide authorization of
appropriations, and for other purposes.
IN THE SENATE OF THE UNITED STATES
June 22 (legislative day, JANUARY 3), 1989
Mr. BRYAN (for himself, Mr. HOLLINGS, Mr. GORE, Mr. BREAUX, and Mr. FORD)
introduced the following bill; which was read twice and referred to the
Committee on Commerce, Science, and Transportation
September 18, 1989
Reported by Mr. HOLLINGS, without amendment
A BILL
To amend the Federal Trade Commission Act to provide authorization of
appropriations, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled, That this Act may be cited as the
  `Federal Trade Commission Act Amendments of 1989'.
UNFAIR METHODS OF COMPETITION
  SEC. 2. Section 5 of the Federal Trade Commission Act (15 U.S.C. 45)
  is amended by adding at the end the following:
  `(n) The Commission shall not have any authority to find a method of
  competition to be an unfair method of competition under subsection (a)(1)
  if, in any action under the Sherman Act, such method of competition would
  be held to constitute State action.'.
AGRICULTURAL COOPERATIVES
  SEC. 3. The Federal Trade Commission Act (15 U.S.C. 41 et seq.) is amended by
  redesignating section 24 and section 25 as sections 25 and 26, respectively,
  and by inserting immediately after section 23 the following new section:
  `SEC. 24. (a) The Commission shall not have any authority to conduct any
  study, investigation, or prosecution of any agricultural cooperative
  for any conduct which, because of the provisions of the Act entitled
  `An Act to authorize association of producers of agricultural products',
  approved February 18, 1922 (7 U.S.C. 291 et seq., commonly known as the
  Capper-Volstead Act), is not a violation of any of the antitrust Acts or
  this Act.
  `(b) The Commission shall not have any authority to conduct any study or
  investigation of any agricultural marketing orders.'.
COMPENSATION IN PROCEEDINGS
  SEC. 4. (a) Section 18(h) of the Federal Trade Commission Act (15
  U.S.C. 57a(h)) is repealed, and subsections (i), (j), and (k) of section
  18 are redesignated as subsections (h), (i), and (j), respectively.
  (b) Section 18(a)(1) of the Federal Trade Commission Act (15
  U.S.C. 57a(a)(1)) is amended by striking `subsection (i)' and inserting
  in lieu thereof `subsection (h)'.
KNOWING VIOLATIONS OF ORDERS
  SEC. 5. (a) Section 5(m)(1)(B) of the Federal Trade Commission Act (15
  U.S.C. 45(m)(1)(B)) is amended by inserting `, other than a consent order,'
  immediately after `order' the first time it appears.
  (b) Section 5(m)(2) of the Federal Trade Commission Act (15 U.S.C. 45(m)(2))
  is amended by adding at the end the following: `Upon request of any party
  to such an action against such defendant, the court shall also review
  the determination of law made by the Commission in the proceeding under
  subsection (b) that the act or practice which was the subject of such
  proceeding constituted an unfair or deceptive act or practice in violation
  of subsection (a).'.
PREVALENCE OF UNLAWFUL ACTS OR PRACTICES
  SEC. 6. Section 18(b) of the Federal Trade Commission Act (15 U.S.C. 57a(b))
  is amended by adding at the end the following new paragraph:
  `(3) The Commission shall issue a notice of proposed rulemaking pursuant
  to paragraph (1)(A) only where it has reason to believe that the unfair or
  deceptive acts or practices which are the subject of the proposed rulemaking
  are prevalent. The Commission shall make a determination that unfair or
  deceptive acts or practices are prevalent under this paragraph only if
  it has issued cease and desist orders regarding such acts or practices,
  or any other information available to the Commission indicates a pattern
  of unfair or deceptive acts or practices.'.
EFFECTIVE DATE OF ORDERS
  SEC. 7. (a) Paragraph (2) of section 5(g) of the Federal Trade Commission
  Act (15 U.S.C. 45(g)) is amended to read as follows:
  `(2) Upon the sixtieth day after such order is served, if a petition for
  review has been duly filed, except that any such order may be stayed, in
  whole or in part and subject to such conditions as may be appropriate, by--
  `(A) the Commission;
  `(B) an appropriate court of appeals of the United States, if (i)
  a petition for review of such order is pending in such court, and (ii)
  an application for such a stay was previously submitted to the Commission
  and the Commission, within the thirty-day period beginning on the date the
  application was received by the Commission, either denied the application
  or did not grant or deny the application; or
  `(C) the Supreme Court, if an applicable petition for certiorari is
  pending; or'.
  (b) Section 5(g)(3) of the Federal Trade Commission Act (15 U.S.C. 45(g)(3))
  is amended to read as follows:
  `(3) For purposes of section 19(a)(2) and section 5(m)(1)(B), if a petition
  for review of the order of the Commission has been filed--
  `(A) upon the expiration of the time allowed for filing a petition for
  certiorari, if the order of the Commission has been affirmed or the petition
  for review has been dismissed by the court of appeals and no petition for
  certiorari has been duly filed;
  `(B) upon the denial of a petition for certiorari, if the order of the
  Commission has been affirmed or the petition for review has been dismissed
  by the court of appeals; or
  `(C) upon the expiration of thirty days from the date of issuance of a
  mandate of the Supreme Court directing that the order of the Commission
  be affirmed or the petition for review be dismissed; or'.
  (c) Section 5(g)(4) of the Federal Trade Commission Act (15 U.S.C. 45(g)(4))
  is amended to read as follows:
  `(4) In the case of an order requiring a person, partnership, or corporation
  to divest itself of stock, other share capital, or assets, if a petition
  for review of such order of the Commission has been filed--
  `(A) upon the expiration of the time allowed for filing a petition for
  certiorari, if the order of the Commission has been affirmed or the petition
  for review has been dismissed by the court of appeals and no petition for
  certiorari has been duly filed;
  `(B) upon the denial of a petition for certiorari, if the order of the
  Commission has been affirmed or the petition for review has been dismissed
  by the court of appeals; or
  `(C) upon the expiration of thirty days from the date of issuance of a
  mandate of the Supreme Court directing that the order of the Commission
  be affirmed or the petition for review be dismissed.'.
CIVIL INVESTIGATIVE DEMANDS
  SEC. 8. (a) Section 20(a) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(a)) is amended--
  (1) in paragraph (2), by striking `unfair or deceptive acts or practices in
  or affecting commerce (within the meaning of section 5(a)(1))' and inserting
  in lieu thereof `act or practice or method of competition declared unlawful
  by a law administered by the Commission';
  (2) in paragraph (3), by striking `unfair or deceptive acts or practices
  in or affecting commerce (within the meaning of section 5(a)(1))' and
  inserting in lieu thereof `acts or practices or methods of competition
  declared unlawful by a law administered by the Commission'; and
  (3) in paragraph (7), by striking `unfair or deceptive act or practice in
  or affecting commerce (within the meaning of section 5(a)(1))' and inserting
  in lieu thereof `act or practice or method of competition declared unlawful
  by a law administered by the Commission'.
  (b) Section 20(b) of the Federal Trade Commission Act (15 U.S.C. 57b-1(b))
  is amended by striking `unfair or deceptive acts or practices in or affecting
  commerce (within the meaning of section 5(a)(1))' and inserting in lieu
  thereof `any act or practice or method of competition declared unlawful
  by a law administered by the Commission'.
  (c) Section 20(c)(1) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(c)(1)) is amended by striking `unfair or deceptive acts or
  practices in or affecting commerce (within the meaning of section 5(a)(1))'
  and inserting in lieu thereof `any act or practice or method of competition
  declared unlawful by a law administered by the Commission'.
  (d) Section 20(j) of the Federal Trade Commission Act (15 U.S.C. 57b-1(j))
  is amended by inserting immediately before the semicolon the following: `,
  any proceeding under section 11(b) of the Clayton Act, or any adjudicative
  proceeding under any other provision of law'.
DEFINITION OF UNFAIR ACTS OR PRACTICES
  SEC. 9. Section 5 of the Federal Trade Commission Act (15 U.S.C. 45),
  as amended by section 2 of this Act, is further amended by adding at the
  end the following:
  `(o) The Commission shall have no authority under this section or section
  18 to declare unlawful an act or practice on the grounds that such act
  or practice is unfair unless the act or practice causes or is likely to
  cause substantial injury to consumers which is not reasonably avoidable
  by consumers themselves and not outweighed by countervailing benefits to
  consumers or to competition.'.
COMMERCIAL ADVERTISING
  SEC. 10. Section 18(h) of the Federal Trade Commission Act (15
  U.S.C. 57a(h)), as so redesignated in section 4(a) of this Act, is amended
  by adding at the end the following: `The Commission shall have no authority
  under this section to initiate any new rulemaking proceeding which is
  intended to or may result in the promulgation of any rule by the Commission
  which prohibits or otherwise regulates any commercial advertising on the
  basis of a determination by the Commission that such commercial advertising
  constitutes an unfair act or practice in or affecting commerce.'.
VENUE; SERVICE OF PROCESS
  SEC. 11. (a) Subsections (a) and (b) of section 13 of the Federal Trade
  Commission Act (15 U.S.C. 53) are each amended by adding at the end thereof
  the following: `Whenever it appears to the court that the interests of
  justice require that any other person, partnership, or corporation should
  be a party in such suit, the court may cause such person, partnership,
  or corporation to be summoned without regard to whether they reside or
  transact business in the district in which the suit is brought, and to
  that end process may be served in any district.'.
  (b) Section 13 of the Federal Trade Commission Act (15 U.S.C. 53)
  is amended--
  (1) by redesignating subsection (c) as subsection (d); and
  (2) by inserting immediately after subsection (b) the following:
  `(c) Any process of the Commission under this section may be served by
  any person duly authorized by the Commission--
  `(1) by delivering a copy of such process to the person to be served, to
  a member of the partnership to be served, or to the president, secretary,
  or other executive officer or a director of the corporation to be served;
  `(2) by leaving a copy of such process at the residence or the principal
  office or place of business of such person, partnership, or corporation; or
  `(3) by mailing a copy of such process by registered mail or certified
  mail addressed to such person, partnership, or corporation at his, her,
  or its residence, principal office, or principal place of business.
The verified return by the person serving such process setting forth the
manner of such service shall be proof of the same, and the return post
office receipt for such process mailed by registered mail or certified mail
as provided in this subsection shall be proof of the service of such process.'.
PHYSICAL EVIDENCE AND CIVIL INVESTIGATIVE DEMANDS
  SEC. 12. (a) Section 20(a) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(a)) is amended--
  (1) by redesignating paragraph (7) as paragraph (8); and
  (2) by inserting immediately after paragraph (6) the following:
  `(7) The term `physical evidence' means any object or device, including any
  medical device, food product, drug, nutritional product, cosmetic product,
  or audio or video recording.'.
  (b) Section 20(c)(1) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(c)(1)) is amended--
  (1) by inserting `physical evidence or' immediately after `any' the second
  time it appears;
  (2) by inserting `to produce such physical evidence for inspection,'
  immediately before `to produce';
  (3) by inserting `physical evidence,' immediately after `concerning'; and
  (4) by inserting `evidence,' immediately before `material, answers,'.
  (c) Section 20(c)(3) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(c)(3)) is amended--
  (1) by inserting `physical evidence or' immediately before `documentary
  material';
  (2) in subparagraph (A)--
  (A) by inserting `physical evidence or' immediately before `documentary'; and
  (B) by inserting `evidence or' immediately after `permit such';
  (3) in subparagraph (B), by inserting `evidence or' immediately before
  `material'; and
  (4) in subparagraph (C), by inserting `evidence or' immediately before
  `material'.
  (d) Section 20(c)(10) of the Federal Trade Commission Act (15
  U.S.C. 57b-1(c)(10)) is amended by inserting `physical evidence or'
  immediately before `documentary material' each place it appears.
REPORT ON RESALE PRICE MAINTENANCE
  SEC. 13. (a) The Federal Trade Commission shall submit to the Committee on
  Commerce, Science, and Transportation of the Senate and to the Committee
  on Energy and Commerce of the House of Representatives the information
  specified in subsection (b) of this section every six months during each
  of the fiscal years 1990, 1991, and 1992. Each such report shall contain
  such information for the period since the last submission under this section.
  (b) Each such report shall list and describe, with respect to instances
  in which resale price maintenance has been suspected or alleged--
  (1) each complaint made, orally or in writing, to the offices of the
  Commission;
  (2) each preliminary investigation opened or closed at the Commission;
  (3) each formal investigation opened or closed at the Commission;
  (4) each recommendation for the issuance of a complaint forwarded by the
  staff to the Commission;
  (5) each complaint issued by the Commission pursuant to section 5 of the
  Federal Trade Commission Act (15 U.S.C. 45);
  (6) each opinion and order entered by the Commission;
  (7) each consent agreement accepted provisionally or finally by the
  Commission;
  (8) each request for modification of an outstanding Commission order filed
  with the Commission;
  (9) each recommendation by staff pertaining to a request for modification
  of an outstanding Commission order; and
  (10) each disposition by the Commission of a request for modification of
  an outstanding Commission order.
Such report shall include the sum total of matters in each category specified
in paragraphs (1) through (10) of this subsection, and copies of all such
consent agreements and complaints executed by the Commission. Where a matter
has been closed or terminated, the report shall include a statement of the
reasons for that disposition. The description required under this subsection
shall be as complete as possible but shall not reveal the identity of persons
or companies making the complaint or those complained about or those subject
to investigation that have not otherwise been made public.
REPORT ON PREDATORY PRICING PRACTICES
  SEC. 14. (a) The Federal Trade Commission shall submit to the Committee on
  Commerce, Science, and Transportation of the Senate and to the Committee
  on Energy and Commerce of the House of Representatives the information
  specified in subsection (b) of this section every six months during each
  of the fiscal years 1990, 1991, and 1992. Each such report shall contain
  such information for the period since the last submission under this section.
  (b) Each such report shall list and describe, with respect to instances
  in which predatory pricing practices have been suspected or alleged--
  (1) each complaint made, orally or in writing, to the offices of the
  Commission;
  (2) each preliminary investigation opened or closed at the Commission;
  (3) each formal investigation opened or closed at the Commission;
  (4) each recommendation for the issuance of a complaint forwarded by the
  staff to the Commission;
  (5) each complaint issued by the Commission;
  (6) each opinion and order entered by the Commission;
  (7) each consent agreement accepted provisionally or finally by the
  Commission;
  (8) each request for modification of an outstanding Commission order filed
  with the Commission;
  (9) each recommendation by staff pertaining to a request for modification
  of an outstanding Commission order; and
  (10) each disposition by the Commission of a request for modification of
  an outstanding Commission order.
Such report shall include copies of all such consent agreements and complaints
executed by the Commission referred to in such report. Where a matter has been
closed or terminated, the report shall include a statement of the reasons
for that disposition. The descriptions required under this subsection shall
be as complete as possible but shall not reveal the identity of persons or
companies making the complaint or those complained about or those subject
to investigation that have not otherwise been made public. The report shall
include any evaluation by the Commission of the potential impacts of predatory
pricing upon businesses (including small businesses).
INTERVENTION BY COMMISSION IN CERTAIN PROCEEDINGS
  SEC. 15. (a) The Federal Trade Commission shall not have any authority to use
  any funds which are authorized to be appropriated to carry out the Federal
  Trade Commission Act (15 U.S.C. 41 et seq.) for fiscal years 1990, 1991,
  and 1992, for the purpose of submitting statements to, appearing before, or
  intervening in the proceedings of, any Federal or State agency unless the
  Commission advises the Committee on Commerce, Science, and Transportation
  of the Senate and the Committee on Energy and Commerce of the House of
  Representatives, at least sixty days before any such proposed action,
  or, if such advance notice is not practicable, as far in advance of such
  proposed action as is practicable.
  (b) The notice required in subsection (a) of this section shall include the
  name of the agency involved, the date upon which the Federal Trade Commission
  will first appear, intervene, or submit comments, a concise statement
  regarding the nature and purpose of the proposed action of the Commission,
  and, in any case in which advance notice of sixty days is not practicable,
  a concise statement of the reasons such notice is not practicable.
RESOURCE ALLOCATION STUDY
  SEC. 16. The Federal Trade Commission shall conduct an evaluation of the
  level of its personnel resources and the manner in which such resources
  are allocated. The Commission shall study--
  (1) whether overall resources at the Commission are adequate to fulfill
  the Commission's responsibilities in the areas of competition and consumer
  protection;
  (2) the distribution of personnel to individual offices of commissioners,
  departments, bureaus, and other units within the Commission, and whether
  the current allocation of personnel most efficiently enables the Commission
  to fulfill its statutory mandate;
  (3) the number of personnel in supervisory positions, contrasted with
  those personnel in nonsupervisory positions; and
  (4) whether the amount of workyears devoted to research activities should
  be increased, and what results (if any) such an increase would produce.
The Commission shall transmit the results of such study, together with any
recommendations that the Commission determines appropriate, to the Committee
on Commerce, Science, and Transportation of the Senate and the Committee
on Energy and Commerce of the House of Representatives not later than six
months after the date of enactment of this Act.
FEDERAL-STATE COOPERATION
  SEC. 17. The Federal Trade Commission shall review its statutory
  responsibilities to identify those matters within its jurisdiction where
  Federal enforcement is particularly necessary or desirable, and those areas
  that might more effectively be enforced at the State or local level. In
  identifying such areas, the Commission shall--
  (1) consider the resources available to the Commission and the States,
  as well as particular rules that have been promulgated by the Commission;
  (2) consult with the attorneys general of the States, representatives of
  consumers and industry, and other interested parties; and
  (3) consider such other issues as will result in more efficient
  implementation of the statutory responsibilities of the Commission.
Not later than six months after the date of enactment of this Act, the Federal
Trade Commission shall transmit to the Committee on Commerce, Science,
and Transportation of the Senate and the Committee on Energy and Commerce
of the House of Representatives the information identified in paragraphs
(1) through (3) of this section, together with specific recommendations for
methods of achieving greater cooperation between the Commission and the States.
AUTHORIZATION OF APPROPRIATIONS
  SEC. 18. Section 25 of the Federal Trade Commission Act, as so redesignated
  by section 3 of this Act, is amended--
  (1) by striking `and' after `1981;'; and
  (2) by inserting immediately before the period at the end the following:
  `; not to exceed $69,580,000 for the fiscal year ending September 30, 1990;
  not to exceed $72,780,000 for the fiscal year ending September 30, 1991;
  and not to exceed $76,128,000 for the fiscal year ending September 30,
  1992, and such additional sums for the fiscal years ending September 30,
  1990, and September 30, 1991, as may be necessary for increases in salary,
  pay, and other employee benefits as authorized by law'.
EFFECTIVE DATE
  SEC. 19. (a) Except as provided in subsections (b), (c), (d), and (e) of
  this section, the provisions of this Act shall take effect on the date of
  enactment of this Act.
  (b) The amendment made by section 2 of this Act shall apply only with
  respect to proceedings under section 5 of the Federal Trade Commission
  Act after the date of enactment of this Act. This amendment shall not
  be construed to affect in any manner a cease and desist order which was
  issued, or a rule which was promulgated, before the date of enactment of
  this Act. This amendment shall not be construed to affect in any manner
  a cease and desist order issued after the date of enactment of this Act,
  if such order was issued pursuant to remand from a court of appeals or the
  Supreme Court of an order issued by the Federal Trade Commission before
  the date of enactment of this Act.
  (c) The amendments made by section 7 and 9 of this Act shall apply only with
  respect to cease and desist orders issued under section 5 of the Federal
  Trade Commission Act (15 U.S.C. 45), or to rules promulgated under section
  18 of the Federal Trade Commission Act (15 U.S.C. 57a), after the date of
  enactment of this Act. These amendments shall not be construed to affect in
  any manner a cease and desist order which was issued, or a rule which was
  promulgated, before the date of enactment of this Act. These amendments shall
  not be construed to affect in any manner a cease and desist order issued
  after the date of enactment of this Act, if such order was issued pursuant
  to remand from a court of appeals or the Supreme Court of an order issued
  by the Federal Trade Commission before the date of enactment of this Act.
  (d) The amendments made by sections 6 and 10 of this Act shall apply only
  to rulemaking proceedings initiated after the date of enactment of this
  Act. These amendments shall not be construed to affect in any manner a
  rulemaking proceeding which was initiated before the date of enactment of
  this Act.
  (e) The amendments made by section 8 of this Act shall apply only with
  respect to compulsory process issued after the date of enactment of this Act.
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