Comments of John Graubert, Principle Deputy General Counsel to the Antitrust Modernization Commission regarding Civil Remedies Available to the Federal Trade Commission

CIVIL REMEDIES AVAILABLE TO THE FEDERAL TRADE COMMISSION
Comments of John Graubert, Principal Deputy General Counsel,
Federal Trade Commission,1
to the Antitrust Modernization Commission
December 1, 2005
Thank you for inviting me to join the discussion this morning. My remarks address some
of the issues raised in the AMC’s Federal Register notice concerning civil remedies in federal
government antitrust cases, in particular the Federal Trade Commission’s authority to seek
equitable monetary relief under 15 U.S.C. § 53(b), often referred to as “Section 13(b).”2 Such
relief, which is granted only by a federal district court, is a longstanding part of the FTC’s arsenal
of remedies for antitrust violations. The agency has exercised this authority carefully and
sparingly. In 2003, the Commission unanimously adopted a Policy Statement describing some of
the factors that would enter into its decision whether to seek monetary remedies in competition
cases.3 Given these self-generated guidelines, the need to preserve the Commission’s ability to
obtain meaningful and effective remedies in its cases, and the absence of any concrete
demonstration that the Commission’s approach to monetary remedies has caused harm to any
1 These comments are my own and not necessarily those of the Commission or any
particular Commissioner. However, the Commission has authorized me to appear today and
deliver these remarks.
2 The Commission has taken no position on the first question posed by the AMC: whether
the FTC should have statutory authority to impose civil fines in antitrust cases. In recent
testimony before Congress on data security and spyware legislation, the Commission has stated
that it may be useful to grant the Commission the authority to seek civil penalties against
spyware distributors and for certain breaches of data security.
3 Policy Statement on Monetary Equitable Remedies in Competition Cases, 68 Fed. Reg.
45,820 (Aug. 4, 2003) [hereinafter Policy Statement].
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party or to the antitrust enforcement system as a whole, I respectfully submit that no legislative
clarification, expansion or limitation of the agency’s 13(b) authority is warranted at this time.
1. The Commission’s Use of Equitable Monetary Remedies Is Well-Established
The Commission’s recourse to equitable disgorgement and restitution remedies in
competition cases goes back many years, although it has exercised this authority sparingly. The
earliest example I am aware of is from 1969, when the Commission obtained disgorgement and
restitution from the Nashua Corp., in settlement of resale price maintenance allegations. 	Since
that time, the Commission has obtained monetary relief in seven district court settlements4 and
four administrative settlements5 involving allegations of anticompetitive practices. The
Commission also has obtained two favorable court decisions on the legal issue of whether a court
may order disgorgement and restitution in a competition case.6
The ability of federal courts to grant equitable monetary relief at the request of the
4 FTC v. Perrigo Co. and Alpharma, Inc., Civ. No. 1:04CV1397 (RMC) (D.D.C. Aug. 12,
2004); FTC v. Mylan Labs, Civ. No. 1:98CV03114 (TFH) (D.D.C. Nov. 29, 2000); FTC v.
Hearst Trust, Civ. No.1:01CV00734 (D.D.C. Dec. 14, 2001); FTC v. College of Physicians-
Surgeons of Puerto Rico, Civ. No. 97-2466 HL (D.P.R. Oct. 2, 1997); FTC v. Mead Johnson &
Co., Civ. No. 92-1266 (D.D.C. June 11, 1992); FTC v. American Home Products Corp., Civ. No.
92-1367 (D.D.C. June 11, 1992); FTC v. Joseph Dixon Crucible Co., Civ. No. C80-700 (N.D.
Ohio 1983).
5 Commonwealth Land Title Ins. Co., 126 F.T.C. 680 (1998) (alleged collusion and
anticompetitive proposed merger); Binney & Smith Inc., 96 F.T.C. 625 (1980) (alleged price-
fixing; redress based on potential Section 19 claim; $1 million in consumer redress); Milton
Bradley Co., 96 F.T.C. 638 (1980) (same; $200,000 in consumer redress); American Art Clay
Co., 96 F.T.C. 809 (1980) (same; $25,000 in consumer redress).
6 FTC v. Mylan Labs., Inc., 62 F. Supp.2d 25 (D.D.C. 1999); FTC v. Abbott Laboratories,
1992-2 Trade Cas. (CCH) ¶ 69,996 (D.D.C. 1992).
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Commission flows from long-standing Supreme Court precedents and has been re-confirmed in a
steady stream of case law since the enactment of Section 13(b).7 The Supreme Court also has
stated on numerous occasions that an essential element of the response to an antitrust violation is
to deprive the violators of the gains from their unlawful conduct.8 Accordingly, the Commission
has sought such relief when the facts of a particular case indicate that a wrongdoer would
otherwise retain some or all of its ill-gotten gain or that consumers would not otherwise be
restored to the status quo ante, and that a simple cease-and-desist order would be inadequate if
not meaningless.
As noted above, the Commission made its approach to monetary remedies more concrete
in its 2003 Policy Statement, in which it said that, “as a general matter,” the Commission would
consider the following three factors in determining whether to seek monetary remedies in
competition cases: (1) whether the underlying violation was clear; (2) whether there is a
reasonable basis for calculating the amount of a remedial payment, and (3) whether Commission
action would add value in light of any other remedies available in the matter, including private
7 See, e.g., Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960); Porter v.
Warner Holding Co., 328 U.S. 395 (1946); Federal Trade Commission v. Gem Merchandising
Corporation, 87 F.3d 466, 469 (11th Cir. 1996); Federal Trade Commission v. Robert J. Febre,
128 F. 3d 530, 537 (7th Cir. 1997); FTC v. Pantron I Corp., 33 F.3d 1088, 1103 n. 34 (9th Cir.
1994).
This line of authority also supports the critical law enforcement activities of other
agencies. See, e.g., SEC v. First City Financial Corp., 890 F.2d 1215, 1230 (D.C. Cir. 1989);
SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082 (2d Cir. 1972); CFTC v. Hunt, 591 F.2d 1211
(7th Cir.), cert. denied, 442 U.S. 921 (1979).
8 See, e.g., United States v. Grinnell Corp., 384 U.S. 563 (1966); United States v. E. I. Du
Pont de Nemours & Co., 366 U.S. 316 (1961); Schine Chain Theatres, Inc. v. United States, 334
U.S. 110, 128 (1948); United States v. Crescent Amusement Co., 323 U.S.173, 189 (1945).
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actions or criminal proceedings. The Commission’s recourse to monetary remedies is therefore
deeply rooted in antitrust jurisprudence, and the Commission has indicated that it approaches the
decision to seek monetary remedies thoughtfully and carefully.
2. The Commission’s Use of Monetary Remedies is Not “Duplicative”
Various parties from time to time have asserted that the Commission’s access to
monetary remedies presents a risk of multiple or “duplicative” damage recovery, assuming that
lawsuits from private plaintiffs or other government agencies also result in damage awards.9 It is
not apparent, however, that any such “duplicative” recovery has ever in fact occurred. In fact, the
available analysis and evidence suggests the contrary. As the Commission observed in note 13 of
its Policy Statement, there is a serious question on both a theoretical10 and empirical level11
whether existing remedies have subjected any antitrust defendant to excessive, “duplicative”
awards.
9 I understand this argument to be a practical one, as the Supreme Court has repeatedly
made clear that there is no legal impediment to a monetary equitable remedy sought by an agency
when the applicable statutory scheme also provides for private remedies. See, e.g., Mitchell v.
Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960); Porter v. Warner Holding Co., 328 U.S. 395
(1946). See also California v. ARC America Corp., 490 U.S. 93 (1989).
10 See, e.g., Robert Lande, Are Antitrust “Treble” Damages Really Single Damages?, 54
OHIO S T . L.J. 115 (1993).
11 For example, during the ABA Antitrust Section Remedies Forum held April 2, 2003,
Professor John Connor from Purdue University presented a summary of his research on the
effects of price-fixing in food additive industries. This analysis suggested that notwithstanding
multiple public and private enforcement actions, including large fines, payments in the United
States were well below treble damages and worldwide payments were below single, actual
damages. See http://www.abanet.org/antitrust/remedies/roundtable1.doc. See generally
http://www.agecon.purdue.edu/staff/connor/papers/index.asp.
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Even though there is no evidence of any actual duplicative recoveries, the Commission
nevertheless responded to this concern in the third prong of its Policy Statement. The
Commission noted it would be sensitive to any prospect of excessive, multiple recovery and
would take actions where appropriate to avoid such a possibility. 	Referring to the long history
of SEC practice in this area, the Commission alluded to the possibilities of set-offs and credits in
subsequent actions, escrow accounts, and other procedural mechanisms. Experience in the
Commission’s three most recent cases, Mylan, Hearst/First Data and Perrigo/Alpharma, has
confirmed that the Commission’s monetary recovery can be coordinated with other proceedings
to minimize conflicts and maximize the recovery to consumers.
3. The Commission Acts When It Can Provide Benefit to Consumers
Similarly, our Policy Statement makes clear that the Commission seriously considers
whether monetary remedies are called for when other remedies are likely to fail to accomplish
fully the purposes of the antitrust laws or when such a monetary remedy may provide important
additional benefits. When other remedies are brought to bear and are likely to result in complete
relief, a Commission action for monetary equitable relief might well be an unnecessary and
unwise expenditure of limited agency resources.
There are, however, situations where reliance on other remedies is likely to be inadequate.
A private action might not provide complete relief for a number of reasons: there may be statutes
of limitation or standing issues; direct purchasers may not sue (for a variety of possible reasons,
including a desire to maintain relationships with suppliers); and indirect purchasers may be
precluded from suit. It may be difficult for private parties to prove damages, for example, from
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HSR violations. The HSR cases are also examples of conduct in which the advantages a violator
reaps from the violation may greatly outweigh the specific penalties prescribed in applicable
laws, making disgorgement even more appropriate.
Finally, when the Commission obtains disgorgement or restitution, all of the recovered
funds, minus relatively small administrative costs if a settlement administrator is retained, are
available for consumers, without a deduction for private counsel’s attorneys’ fees. The
Commission’s recent monetary relief cases have been resolved efficiently and relatively quickly
compared with their private counterparts. I submit that these cases demonstrate that transaction
costs can be reduced when the government obtains a quick and meaningful recovery.
Conclusion
For more than thirty years, the Federal Trade Commission and the courts have carefully
explored the proper use of equitable monetary remedies in competition cases. These remedies
enable the Commission to tailor remedies in particular cases as needed to provide complete and
effective relief, and to eradicate so far as possible the effects of an antitrust violation. The
Commission has provided the business community with substantial guidance on the
circumstances in which the Commission may or may not seek these remedies. There has been no
showing of any respect in which the actions of the Commission or the courts in this regard have
had any untoward effects. I therefore respectfully submit there is no basis for any legislative
intervention in this area.
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