Rules of Practice, 1804-1836 [E9-296]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 74, Number 8 (Tuesday, January 13, 2009)]
[Rules and Regulations]
[Pages 1804-1836]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-296]



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Part III





Federal Trade Commission





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16 CFR Parts 3 and 4



Rules of Practice; Final Rule

Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Rules 
and Regulations

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FEDERAL TRADE COMMISSION

16 CFR Parts 3 and 4


Rules of Practice

AGENCY: Federal Trade Commission (``Commission'' or ``FTC'').

ACTION: Interim final rules with request for comment.

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SUMMARY: The FTC is amending Parts 3 and 4 of its Rules of Practice, 16 
CFR Parts 3 and 4, in order to further expedite its adjudicative 
proceedings, improve the quality of adjudicative decision making, and 
clarify the respective roles of the Administrative Law Judge (``ALJ'') 
and the Commission in Part 3 proceedings.

DATES: These interim final rules are effective on January 13, 2009. 
These amendments will govern all Commission adjudicatory proceedings 
that are commenced after January 13, 2009 The rules that were in effect 
before January 13, 2009 will govern all currently pending Commission 
adjudicatory proceedings. Written comments must be received on or 
before February 12, 2009.

ADDRESSES: Interested parties are invited to submit written comments 
electronically or in paper form. Comments should refer to ``Parts 3 and 
4 Rules of Practice Rulemaking - P072104'' to facilitate the 
organization of comments. Please note that comments will be placed on 
the public record of this proceeding--including on the publicly 
accessible FTC website at (https://www.ftc.gov/os/publiccomments.shtm) 
-- and therefore should not include any sensitive or confidential 
information. In particular, comments should not include any sensitive 
personal information, such as an individual'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. Comments also should 
not include any sensitive health information, such as medical records 
and other individually identifiable health information. In addition, 
comments should not include any ``[t]rade secret or any commercial or 
financial information which is obtained from any person and which is 
privileged or confidential. * * *,'' as provided in Section 6(f) of the 
Federal Trade Commission Act (``FTC Act''), 15 U.S.C. 46(f), and 
Commission Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing 
material for which confidential treatment is requested must be filed in 
paper form, must be clearly labeled ``Confidential,'' and must comply 
with Commission Rule 4.9(c).\1\
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    Because paper mail in the Washington area, and specifically to the 
FTC, is subject to delay due to heightened security screening, please 
consider submitting your comments in electronic form. Comments filed in 
electronic form should be submitted by using the following weblink: 
(https://secure.commentworks.com/ftc-part3rules) (and following the 
instructions on the web-based form). To ensure that the Commission 
considers an electronic comment, you must file it on the web-based form 
at the weblink: (https://secure.commentworks.com/ftc-part3rules). If 
this document appears at (https://www.regulations.gov/search/index.jsp), 
you may also file an electronic comment through that website. The 
Commission will consider all comments that regulations.gov forwards to 
it. You may also visit the FTC website at www.ftc.gov to read this 
document and the news release describing it.
    A comment filed in paper form should include the ``Parts 3 and 4 
Rules of Practice Rulemaking - P072104'' reference both in the text and 
on the envelope, and should be mailed or delivered by courier to the 
following address: Federal Trade Commission, Office of the Secretary, 
Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 
20580.
    The FTC Act and other laws 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, whether filed in paper or electronic 
form. Comments received will be available to the public on the FTC 
website, to the extent practicable, at (https://www.ftc.gov/os/
publiccomments.shtm). As a matter of discretion, the Commission makes 
every effort to remove home contact information for individuals from 
the public comments it receives before placing those comments on the 
FTC website. More information, including routine uses permitted by the 
Privacy Act, may be found in the FTC's privacy policy, at (https://
www.ftc.gov/ftc/privacy.shtm).

FOR FURTHER INFORMATION CONTACT: Michael D. Bergman, Attorney, (202) 
326-3184, or Lisa M. Harrison, Attorney, (202) 326-3204, Office of the 
General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue, NW, 
Washington DC 20580.

SUPPLEMENTARY INFORMATION: This discussion contains the following 
sections:

I. Overview of Proposal and Comments Received
II. Section-by-Section Analysis of Interim Final Rule Revisions
III. Invitation to Comment
IV. Interim Final Rule Revisions

I. Overview of Proposal and Comments Received

    In its October 7, 2008, Notice of Proposed Rulemaking 
(``NPRM''),\2\ the Commission invited public comment on proposed 
amendments to its Rules of Practice governing formal adjudicatory 
(``Part 3'') proceedings. This public comment period closed on November 
6, 2008. The Commission observed in the NPRM that it has periodically 
engaged in reform efforts to minimize delay and improve the quality of 
the administrative decisionmaking process in a fair manner fully 
consistent with the Administrative Procedure Act (``APA'')\3\ without 
prejudicing the due process rights of the parties in these proceedings. 
Past reforms and the ones proposed in the NPRM have primarily dealt 
with the long-standing concerns of the courts and the bar that the 
Commission's Part 3 adjudicatory process has been too protracted.\4\
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    \2\ 73 FR 58832 (Oct. 7, 2008).
    \3\ 5 U.S.C. 551 et seq.
    \4\ See, e.g., FTC v. Freeman Hosp., 911 F. Supp. 1213, 1228 n.8 
(W.D. Mo. 1995) (``The average time from the issuance of a complaint 
by the FTC to an initial decision by an administrative law judge 
averaged nearly three years in 1988. Moreover, additional time will 
be required if that initial decision is appealed.''), aff'd, 69 F.3d 
260 (8th Cir. 1995); see also National Dynamics Corp. v. FTC, 492 
F.2d 1333, 1335 (2d Cir. 1974) (remarking upon the ``leisurely 
course typical of FTC proceedings''); J. Robert Robertson, FTC Part 
III Litigation: Lessons from Chicago Bridge and Evanston 
Northwestern Healthcare, 20 Antitrust 12 (Spring 2006); Report of 
the American Bar Association Section of Antitrust Law Special 
Committee to Study the Role of the Federal Trade Commission, 58 
Antitrust L.J. 43, 116 n.167 (1989) (``It is disappointing that the 
Commission * * * continues to have problems of delay.'').
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    In merger cases, parties frequently argue that drawn out 
proceedings will result in their abandoning transactions before the 
antitrust merits can be adjudicated and indeed the protracted nature of 
Part 3 proceedings has contributed to the reluctance of some federal 
courts to grant preliminary relief in merger cases brought under 
Section

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13(b) of the FTC Act, 15 U.S.C. 53(b). Moreover, protracted Part 3 
proceedings do not necessarily result in decisions that are more just 
or fair, and instead may result in substantially increased litigation 
costs for the Commission and respondents whose transactions or 
practices are challenged. For example, protracted discovery schedules 
and pretrial proceedings can result in nonessential discovery and 
motion practice that can be very costly to the Commission, respondents, 
and third parties.
    One of the most critical advantages of administrative 
adjudications, and a cornerstone characteristic of administrative 
agencies, is expertise. As detailed more fully in the NPRM, the 
Congress and the Executive have long recognized that the ability of 
administrative agencies to apply their expertise and to devote 
substantial resources to complex problems calling for specialized 
knowledge is a critical advantage and an important reason for the 
creation of those agencies.\5\ In creating the Commission, Congress 
intended the agency to use its substantive expertise and administrative 
adjudicative authority as a ``uniquely effective vehicle for the 
development of antitrust law in complex settings in which the agency's 
expertise [could] make a measurable difference,''\6\ as well as to 
apply its specialized knowledge to consumer protection matters. 
Certainty and quality in Commission opinions could serve not only to 
improve the resolution of individual cases, but to provide broad 
guidance to industry and the public and help set the policy agenda.\7\ 
With its expertise and unique institutional tools, the Commission was 
created to be--and continues to function as--a forum for expert 
adjudication.
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    \5\ Final Report of the Attorney General's Committee on 
Administrative Procedure 16 (1941) [hereinafter Attorney General's 
Final Report]; see also Marc Winerman, The Origins of the FTC: 
Concentration, Cooperation, Control, and Competition, 71 Antitrust 
L.J. 15 (2003) (discussing the formation and history of the FTC); D. 
Bruce Hoffman & M. Sean Royall, Administrative Litigation at the 
FTC: Past, Present, and Future, 71 Antitrust L.J. 319 (2003) 
(discussing the evolution of administrative adjudication at the 
FTC).
    \6\ Hoffman & Royall, supra note 5, at 319-20.
    \7\ Id.
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    The Commission also recognizes that the APA and the Attorney 
General's Final Report\8\ contemplated an important role for the 
hearing examiner (the predecessor of the ALJ) in the adjudicatory 
process when acting as the presiding official to preside over 
prehearing proceedings, hear evidence and issue an initial decision.\9\ 
Under the APA, the ALJ's authority is, however, ``subject to the 
published rules of the agency,'' a qualification which ``is intended to 
make clear the authority of the agency to lay down policies and 
procedural rules which will govern the exercise of such powers by 
[ALJs].''\10\ Thus, while the Commission's rules provide the presiding 
ALJ with necessary tools to ``conduct fair and impartial hearings, to 
take all necessary action to avoid delay in the disposition of 
proceedings, and to maintain order,''\11\ and with important duties 
including initial fact finding responsibilities, the ALJ must 
ultimately adhere to Commission decisions. The Commission believes the 
rules issued in this notice strike the appropriate balance between the 
important role played by the ALJ and the need to apply the Commission's 
expertise.
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    \8\ See supra note 5.
    \9\ See 5 U.S.C. 556(c).
    \10\ Attorney General's Manual on the Administrative Procedure 
Act 74-75 (1947) [hereinafter Attorney General's Manual]; see also 
Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 
Inc., 435 U.S. 519, 524 (1978) (holding that agencies have 
discretion to enact procedures where Congress provided agencies with 
``the responsibility for substantive judgments.'').
    \11\ 16 CFR 3.42(c).
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    The proposed amendments announced in the October 7, 2008, NPRM were 
the culmination of a recent broad and systematic internal review to 
improve the Commission's Part 3 practices and procedures in light of 
recent adjudicatory experiences. The Commission undertook this effort 
in order to improve the Part 3 process through a comprehensive review, 
rather than piecemeal modifications of a limited number of rules, which 
would ensure that the rules are consistent with one another and that 
they are workable in practice. Input was obtained from various bureaus 
and offices within the Commission and staff further reviewed the APA's 
legal standards, the rules and procedures of the federal courts, and 
other agencies' adjudicative procedures.
    The Commission intended for the proposed amendments to balance 
three important interests: the public interest in a high quality 
decisionmaking process, the interests of justice in an expeditious 
resolution of litigated matters, and the interest of the parties in 
litigating matters without unnecessary expense. For example, in 
principle, expedited adjudications, while maintaining the high quality 
of the proceeding, may impose costs on the parties or the agency that 
they may not need bear if the demands of a given case permit a more 
leisurely adjudicative process. Alternatively, attempts to increase 
efficiency or decrease costs to those involved could lead to trade offs 
in the quality of the ultimate result.
    The most significant of the proposals in the NPRM included tighter 
time limits during the adjudicatory process leading up to the issuance 
of the initial decision, changes to ensure that the Commission can 
appropriately apply its legal and policy expertise earlier in the 
adjudicatory process, reforms in discovery and motions practice, the 
streamlining and expedition of evidentiary hearings, and a change in 
the Commission's process for handling motions to dismiss or to withdraw 
a case from administrative adjudication after a federal court's denial 
of a preliminary injunction in an action brought by the Commission.
    The Commission received eight comments on the proposed amendments 
from seven individuals or entities: a joint comment from Robert 
Pitofsky\12\ and Michael N. Sohn,\13\ the Section of Antitrust Law of 
the American Bar Association (``Section''), Whole Foods Market, Inc. 
(``Whole Foods'') (two comments), Linda Blumkin,\14\ the Chamber of 
Commerce of the United States of America (``Chamber''), Stephen 
Nagin,\15\ and Richard Hallberg. Some commenters endorsed the 
objectives of the Commission's proposed amendments. The Section 
commented that it ``supports the Commission's efforts to expedite 
certain adjudicative proceedings, improve the quality of its 
adjudicative decision making, and clarify the respective roles'' of the 
Commission and the ALJ. The Pitofsky-Sohn comment noted that 
``expediting Part 3 proceedings is a step in the right direction.''
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    \12\ Counsel to Arnold & Porter LLP and Sheehy Professor of 
Trade Regulation Law, Georgetown University Law Center. Mr. Pitofsky 
served as Chairman of the Commission and previously held other 
positions in the agency.
    \13\ Senior Partner, Arnold & Porter LLP and former General 
Counsel of the Commission.
    \14\ Former Assistant Director for General Litigation in the 
Bureau of Competition.
    \15\ Nagin, Gallup & Figueredo, PA.
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    But these and other commenters objected to various specific 
proposals and the absence of any proposal that would set a deadline on 
the Commission itself, in particular:
    (i) the proposed time limits did not set deadlines for the 
Commission to resolve appeals from initial decisions; (ii) the time 
limits imposed on ALJs were too rigid and might deprive respondents in 
some proceedings of their due process right to be heard; (iii) the 
proposals enabled the Commission to decide dispositive motions while a 
case is pending before an ALJ and would, therefore, undermine the ALJ's

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independence; (iv) the Commission was changing its policy on when it 
would pursue a case after a denial of a preliminary injunction; and (v) 
the proposed rule explicitly stating that the Commission or a 
designated Commissioner could oversee portions of the pretrial process 
infringed on the ALJ's independence. Several commenters argued that the 
30-day comment period was inadequate.

i) Deadlines on Commission decision making.

    Upon consideration of the various comments, the Commission agrees 
that the proposed rules should set deadlines on the Commission to act 
on appeals of initial decisions. The Commission is now adopting in Rule 
3.52 tight deadlines on its resolution of appeals. For cases in which 
the Commission seeks preliminary relief under Section 13(b) of the FTC 
Act, 15 U.S.C. 53(b), there will be automatic Commission review of the 
initial decision (i.e., no notice of appeal will need to be filed), 
briefing will be completed within 45 days of the issuance of the 
initial decision, and the Commission will commit to issue its final 
decision within 45 days of oral argument (i.e., within 100 days of the 
initial decision).\16\ For all other cases, an appealing party will 
need to file its objections to the initial decision by filing a notice 
of appeal, all briefing will be completed within 67 days of the initial 
decision, and the Commission will commit to issue its final decision 
within 100 days of oral argument (i.e., within six months of the 
initial decision).
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    \16\ The timing deadlines for the Commission's decisions on 
appeal or review, as with other rule deadlines, are subject to the 
timing requirements in Rule 4.3(a), which addresses, inter alia, 
when deadlines fall on a weekend or holiday.
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    Consistent with the need for expedited procedures, the Commission 
is also setting deadlines for when it must rule on dispositive motions, 
applications for interlocutory appeals, and motions to dismiss after 
the denial of a preliminary injunction.

ii) Deadlines leading up to Initial Decision.

    The comments filed so far do not persuade the Commission that its 
default timing deadlines are unfair. Comments that the revised rules 
would unduly limit respondents' ability to engage in adequate discovery 
or develop their defenses, and, hence, would violate their right to due 
process, have yet to provide support for this argument. The APA does 
not expressly require discovery. See McClelland v. Andrus, 606 F.2d 
1278, 1285 (D.C. Cir. 1979). Although ``discovery must be granted if in 
the particular situation a refusal to do so would so prejudice a party 
as to deny him due process,'' id. at 1286, it is difficult to see how 
the five and eight month deadlines from complaint to hearing, and the 
duration of pretrial discovery imposed by Rule 3.11(b), fail to satisfy 
due process. The comments thus far fail to demonstrate that respondents 
would not have adequate time to pursue broad discovery. Indeed, the 
revised rules allow the parties to move for more time upon a showing of 
good cause. Antitrust cases in federal court, such as the government's 
monopoly case against Microsoft and its merger case against Oracle, 
have gone to trial on roughly similar schedules, suggesting the 
reasonableness of such time frames.\17\
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    \17\ See, e.g., United States v. Microsoft, 253 F.3d 34 (D.C. 
Cir. 2001); United States v. Oracle Corp., 331 F. Supp. 2d 1098 
(N.D. Cal. 2004).
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    Further, the criticism in the comments received thus far that the 
time limits are too short fails to give adequate weight to provisions 
that authorize the Commission to grant extensions for ``good cause.'' 
The Commission anticipates that this authority will be used sparingly 
but is determined to use this authority whenever necessary to ensure 
that the parties have adequate time to prepare for trial and to present 
their case.

iii) Dispositive motions.

    Commenters' concerns about the role of the Commission in deciding 
legal and policy issues early in the proceeding have not demonstrated 
that early Commission involvement improperly interferes with the 
independence of the ALJ. This is especially true in view of the role 
that Congress envisioned for the Commission as an expert adjudicator. 
Moreover, as explained in the analysis of Rule 3.22, while the APA does 
confer a variety of powers on the ALJ primarily during and after the 
conduct of the evidentiary hearing, this does not include the authority 
to rule on prehearing motions that turn on legal and policy 
determinations.\18\ Rather, the ALJ's authority to rule on such motions 
depends on whether an agency has provided the ALJ with this power in an 
agency rule. Commission Rule 3.22 previously granted ALJ's this power, 
and the Commission plainly has the authority to limit it.
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    \18\ For example, the APA authorizes the ALJ to ``dispose of 
procedural requests or similar matters'' during the hearing, subject 
to the published rules of the agency. 5 U.S.C. 556(c)(9).
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iv) 1995 Policy Statement and procedures related to Part 3 proceedings 
following denial of a preliminary injunction.

    The Commission has adopted its proposal to amend Rule 3.26 to 
eliminate automatic withdrawals from adjudication or stays of Part 3 
proceedings when a party files a motion for withdrawal or to dismiss 
based on the denial of a preliminary injunction in an ancillary federal 
court action brought by the Commission. The Commission, however, has 
also amended the Rule to promote more prompt consideration of whether 
to proceed with Part 3 by providing for the filing of such motions long 
before the Commission has an opportunity to exhaust its appeals as 
provided in the previous Rule, and has also set a 30-day deadline for 
the Commission to decide such motions. The Commission also reaffirms in 
this document its adherence to its 1995 Policy Statement calling for a 
case-by-case analysis of whether the Commission should pursue Part 3 
litigation after it loses a preliminary injunction.\19\
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    \19\ 60 FR 39741 (Aug. 3, 1995).
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v) The proposed amendment providing express authority for the 
Commission or a Commissioner to preside over prehearing procedures.

    Commenters criticized as infringing on the independence of the ALJ 
proposed Rule 3.42(a) that would have made explicit the authority of 
the Commission or one of its members to preside over discovery or 
certain other prehearing procedures before transferring the matter to 
the ALJ. The Commission or its members have the authority to preside 
over prehearing procedures under the APA, 5 U.S.C. 556(b), as well as 
unamended Rule 3.42, and the collection of rule revisions adopted today 
reduce the need for early Commission involvement in case management. 
For these reasons, and to ensure there is no public misperception that 
the proposed revision unfairly enlarged the Commission's authority, the 
Commission has decided not to adopt the proposed revision to this rule.

vi) Improving Part 3 litigation while protecting the rights of the 
parties.

    Upon consideration of all the comments received so far, the 
Commission believes that the rules will improve the Part 3 litigation 
process. The timing deadlines, while aggressive, are consistent with 
the manner in which federal courts can move in complex antitrust cases, 
and parties can seek to extend them when necessary. The rules

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bring the Commission's expertise to bear sooner in the process, which 
can be expected to streamline cases, especially where the principal 
issue is legal not factual, while ensuring that the ALJs will continue 
to play the dominant role in managing the litigation and overseeing the 
evidentiary hearing.

vii) Comment periods.

    As stated in the NPRM, the Commission sought public comment even 
though the proposed rule revisions relate solely to agency practice, 
and thus are not subject to the notice and comment requirements of the 
APA, 5 U.S.C. 553(b)(A). The Commission has been well served by the 
public comment period and the quality of many of the criticisms and 
suggestions undercuts the argument of some commenters that the 30-day 
comment period was too short. In any event, the rule amendments 
published in this notice are being issued only on an interim basis, and 
any rules that the Commission re-promulgates after the current comment 
period are not necessarily permanent. Instead, the Commission is 
instructing its internal Standing Committee on the Part 3 rules, as 
announced in the NPRM, to make recommendations bi-annually to the 
Commission on the need for changes to the Part 3 rules, including the 
rule revisions that become effective today and any rules that the 
Commission re-promulgates after the current comment period.
    In view of the many modifications and additions to rule amendments 
proposed in the NPRM and described in Part II of this document, the 
Commission is requesting further comments on its adjudicatory reforms. 
The Commission will consider comments on any of the rule revisions 
issued today, but will especially welcome comment on any amendments 
that were not proposed in the NPRM.
    The comments are addressed in more detail in the following section-
by-section analysis of the interim final rule revisions.\20\
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    \20\ The final rule amendments are not subject to the 
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2) or 
the requirements of the Paperwork Reduction Act, 44 U.S.C. 
3518(c)(1)(B)(ii); 5 CFR 1320.4 (exempting information collected 
during the conduct of administrative proceedings or investigations).
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II. Section-by-Section Analysis of Interim Final Rule Revisions

Subpart A--Scope of Rules; Nature of Adjudicative Proceedings

Section 3.1: Scope of the rules in this part.

    The proposed amendment would have allowed the ALJ or the Commission 
to shorten time periods set by the Rule, provided that the shortened 
time periods would not unfairly prejudice any party. This authority is 
intended for use in proceedings where expedited procedures would serve 
the public interest (e.g., unconsummated mergers) or where the issues 
do not require elaborate discovery or evidentiary hearings (e.g., cases 
where the parties agree that a copious evidentiary record already 
exists that merely needs to be supplemented). In response to a comment, 
the Commission is amending the Rule to provide that the ALJ or the 
Commission may shorten time periods with the consent of the parties. 
Because consent will be required, the Commission is eliminating as 
unnecessary the qualifications that the shortening of a time period 
must not ``unfairly prejudice any party'' and not violate a party's 
legal rights. The Commission has also amended the Rule to state that 
the Part 3 rules generally apply only to ``formal'' adjudicative 
proceedings, i.e., those actions that are governed by the adjudicatory 
provisions of the APA, 5 U.S.C. 554, 556-57.

Section 3.2: Nature of adjudicative proceedings.

    The Commission proposed technical revisions to this Rule that would 
clarify that Commission consideration of consent orders--in addition to 
negotiations of consent orders--are not adjudicative proceedings. The 
proposed changes also omitted from the list of excluded items 
proceedings under specific statutes that have rarely occurred in recent 
decades. No comments were received on the proposed revisions, and the 
Commission adopts them as proposed.

Subpart B--Pleadings

Section 3.11: Commencement of proceedings.

    The Commission proposed amending Rule 3.11(b) to specify that the 
actual date for the evidentiary hearing would be five months from the 
date the complaint is issued in merger cases and eight months from the 
date of the complaint in all other cases, while allowing the Commission 
discretion to determine a different date for the evidentiary hearing 
when it issues the complaint. The Commission would also be able to 
extend the date of the evidentiary hearing upon a good cause showing by 
movants, as set out in proposed Rule 3.21(c).
    The Section and Whole Foods asserted that the five and eight month 
deadlines, along with the deadlines in other rules, are ``one-size-
fits-all'' rules. These comments overlooked the Commission's ability to 
extend the hearing date for all types of cases where a party can show 
that it needs more time to prepare for trial. The Commission, in its 
discretion, could also consider other factors in determining whether to 
find good cause to extend the hearing date, for example, if a 
respondent agrees not to consummate a merger that has not been enjoined 
by a court during the pendency of the Part 3 proceeding.
    The Section stated further that the five month deadline for 
consummated merger cases ``may be appropriate in some cases and not in 
other cases'' and that ``whether the matter was the subject of a 
preliminary injunction hearing'' should be one of the factors 
considered in setting the hearing date for consummated mergers. The 
Commission believes this comment has merit and is revising the Rule so 
that only those cases in connection with which the Commission has 
sought or is seeking relief under Section 13(b) of the FTC Act\21\ will 
be subject to the five month deadline, unless of course the Commission 
sets a different date for the evidentiary hearing when it issues the 
complaint.The eight month deadline will apply to all other cases unless 
the Commission sets a different deadline when it issues the complaint. 
For example, it is possible that the Commission might set a consummated 
merger case, that was not the subject of a Section 13(b) action, under 
the five month schedule if an expedited schedule would be in the public 
interest.
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    \21\ 15 U.S.C. 53(b).
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    The Commission typically seeks preliminary injunctive relief under 
Section 13(b) when it challenges an unconsummated merger, and the Part 
3 proceedings in these cases are frequently the ones that are most in 
need of expedition. As noted above, parties have argued that protracted 
proceedings for merger cases could result in their abandoning 
transactions before their antitrust merits can be adjudicated. The 
interim final Rule, like the proposed Rule, provides the Commission 
discretion to determine a different date for the evidentiary hearing 
when it issues the complaint, and Rule 3.21(c) provides that the 
Commission

[[Page 1808]]

may subsequently extend the date of the hearing upon a good cause 
showing by movants.
    The Chamber and Whole Foods asserted that rules expediting 
proceedings may violate due process if they deny respondents a fair 
opportunity to develop their defense. Whole Foods stated further that 
the deadlines favor complaint counsel because respondents do not share 
complaint counsel's power to obtain fact discovery during the pre-
complaint investigation conducted pursuant to Part 2 of the 
Commission's Rules of Practice.\22\ The five and eight month pretrial 
periods, however, should provide sufficient time for respondents to 
obtain discovery. Rule 3.31(a) requires both complaint counsel and 
respondent's counsel to make comprehensive initial disclosures within 
five days of receipt of respondent's answer to the complaint. These 
disclosures include documents complaint counsel has obtained from third 
parties, subject to the limitations on discovery in Rule 3.31(c)(2). 
The rules allow respondents to serve immediately on other parties 
interrogatories and requests for production of documents. Further, the 
rules allow respondents to issue immediately subpoenas for discovery, 
subject to the restrictions of Rules 3.36 and 3.31(c)(2). In the 
unlikely event that a respondent does not have adequate time for 
discovery, the respondent may file a motion with the Commission to 
delay the hearing date.
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    \22\ 16 CFR 2.1 et seq.
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    Further, the APA does not expressly provide for discovery, and as 
at least two appellate courts have observed:
 The extent of discovery to which a party to an administrative 
proceeding is entitled is primarily determined by the particular 
agency. . . . [C]ourts have consistently held that agencies need not 
observe all the rules and formalities applicable to courtroom 
proceedings. If an agency has adopted rules providing for discovery in 
its proceedings, the agency is bound by those rules and must ensure 
that its procedures meet due process requirements.\23\
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    \23\ Pacific Gas & Elec. Co. v. FERC, 746 F.2d 1383, 1387-88 
(9th Cir. 1984) (citing McClelland v. Andrus, 606 F.2d 1278, 1285 
(D.C. Cir. 1979)).
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    As demonstrated above, and based on the comments received thus far, 
the five and eight month deadlines more than satisfy due process 
requirements because respondent will have ample time for broad 
discovery and a respondent may also move for more time upon a showing 
of good cause under Rule 3.21(c).
    The deadlines in Rule 3.11 are similar to the schedules established 
in some complex antitrust cases in federal district court, some of 
which have gone to trial in five months or less.\24\ Moreover, other 
federal agencies provide limits on the pretrial process. For example, 
the Securities and Exchange Commission (``SEC'') puts cases on one of 
three tracks when it issues an order instituting administrative 
proceedings. For the longest track, SEC rules require that the hearing 
commence approximately four months from the date of the order.\25\
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    \24\ See, e.g., United States v. Microsoft, 253 F.3d 34 (D.C. 
Cir. 2001); United States v. Oracle Corp., 331 F. Supp. 2d 1098 
(N.D. Cal. 2004).
    \25\ 17 CFR 201.360(a)(2).
---------------------------------------------------------------------------

    In contrast to the concerns raised by the Chamber and Whole Foods, 
the Section supported a far more accelerated pretrial schedule for 
unconsummated mergers. The Section advocated a five month period from 
complaint issuance to final Commission order for these cases. The 
Section's recommendation was based on its concern, shared by the 
Pitofsky-Sohn comment, that the proposed rules ``will not expedite Part 
3 proceedings nearly enough to make them practicable for unconsummated 
mergers.''\26\
---------------------------------------------------------------------------

    \26\ Both sets of comments noted that the proposed Rule fails to 
address a substantial source of delay--the time it takes the 
Commission to issue a final decision. As discussed below in the 
analysis of Rule 3.52, the Commission is responding to this concern 
by adopting rules that will expedite Commission review of initial 
decisions in all cases.
---------------------------------------------------------------------------

    The Commission also proposed deleting Rule 3.11(c), which allowed 
the respondent to file a motion for more definite statement. These 
motions are seldom filed and even less likely to be granted because 
Commission complaints are typically very detailed. Moreover, under 
previous Rule 3.12, if a respondent elected to file a motion for more 
definite statement, the motion tolled the deadline for the answer to 
the complaint and would result in substantial delay in the proceedings. 
As noted below, respondents may still raise similar objections in a 
motion to dismiss. The Commission therefore adopts this change.

Section 3.12: Answer.

    Proposed Rule 3.12(a) shortened the deadline for filing an answer 
from 20 to 14 days. The Section opposed a reduction in the time to 
answer the complaint, arguing that complaints can be very detailed and 
that respondents need adequate time to analyze the factual and legal 
allegations to respond properly, while the time saved by the Rule is 
modest. The Commission continues to believe, however, that 14 days to 
answer the complaint are sufficient for respondents who have become 
familiar with the issues during the Part 2 precomplaint investigation. 
While the Section argues that Part 2 ``is not a substitute for'' Part 3 
proceedings and that respondents often are not made aware of ``the full 
range of facts'' or gain a complete understanding of the Commission's 
legal theory during Part 2, the fact remains that very few, if any, 
Part 3 cases are ever initiated without the respondent having had 
extensive meetings with the Commissioners and staff. By the time the 
Commission issues a complaint, the parties should be well aware of the 
agency's factual and legal assertions. Further, if necessary, the 
Commission may exercise its authority to extend the 14 days for good 
cause. See Rule 4.3(b). The Commission is adopting the revision as 
proposed.
    Proposed Rule 3.12(a) also eliminated the provision in the Rule 
that allowed the filing of any motion to toll the deadline for 
respondents to file an answer to the complaint.\27\ The Commission was 
concerned that this provision too broadly permitted the filing of any 
motion, regardless of its merit or requested relief, to substantially 
delay the beginning of the Part 3 proceeding. The Section objected that 
no answer should be required until, at least, resolution of a motion 
for a more definite statement or to strike that challenges the 
sufficiency of a complaint. The Commission notes that its complaints 
tend to be highly detailed and that motions for a more definite 
statement are rarely filed and more rarely granted. Respondents may, 
however, always file a motion to dismiss to challenge the sufficiency 
of the complaint if necessary. The revisions to Rule 3.12(a) will 
ensure an earlier prehearing conference, earlier discovery, and will 
expedite the ultimate resolution of the proceeding. The Commission 
adopts the revisions to Rule 3.12(a) as proposed.
---------------------------------------------------------------------------

    \27\ This provision had been added by the Commission in its 2001 
Rule amendments. See 66 FR 17622 (Apr. 3, 2001).
---------------------------------------------------------------------------

    The Commission also proposed in Rule 3.12(b) and (c) to eliminate 
the ALJ's authority to render an initial decision when the allegations 
of the complaint are admitted or there is a default. In those cases, 
the Commission would issue a final decision on the basis of the facts 
alleged in the complaint. While the Section suggested that a decision 
by an independent ALJ can be useful even without a record to review, 
the Commission believes that in these

[[Page 1809]]

circumstances cases can be resolved more expeditiously without the 
intermediate step of an ALJ's initial decision; the only issues in such 
cases are legal or policy ones, in which the Commission's expertise is 
most relevant. The proposed revisions are adopted.

Subpart C--Prehearing Procedures; Motions: Interlocutory Appeals; 
Summary Decisions

Rule 3.21: Prehearing procedures.

    The Commission proposed amendments to Rule 3.21 that would impose 
tighter deadlines on prehearing procedures. No comments on this Rule 
were received, and the Commission adopts the rule revisions as 
proposed. Rule 3.21(a) requires that the parties' initial meet-and-
confer session take place within five days of the answer and requires 
the parties to discuss electronically stored information (``ESI'') at 
that time, including the scope of and the time period for the exchange 
of ESI and the format for exchanging such information. This change is 
intended to help expedite the case and facilitate resolution of 
production issues in ways that minimize costs. Rule 3.21(a) is also 
modified by deleting a phrase that suggested the parties should discuss 
a proposed hearing date because that date will already have been set by 
the Commission when it issued the complaint and the date can be 
modified only by the Commission upon a showing of good cause. Rule 
3.21(a), as amended, specifies broad subjects to be discussed at the 
parties' meet-and-confer session(s) before the scheduling conference.
    Rule 3.21(b) advances the deadline for the scheduling conference 
from 14 days after the answer is filed to 10 days after the answer is 
filed. Although the Commission extended the deadline to 14 days in 
2001,\28\ it believes the ten day deadline is reasonable for most 
cases. The Rule includes additional items to be discussed at the 
scheduling conference, such as stages of the proceeding that may be 
expedited. Under the Rule, the Commission contemplates that the parties 
will inform the ALJ of the results of their initial meeting(s) 
regarding their proposed discovery plan, including the disclosure of 
ESI, and that the ALJ will incorporate in the scheduling order a 
discovery plan that he or she deems appropriate.
---------------------------------------------------------------------------

    \28\ Id.
---------------------------------------------------------------------------

    Rule 3.21(c)(1) specifies that the ALJ's scheduling order will 
establish a schedule of proceedings that will permit the evidentiary 
hearing to commence on the date set by the Commission. The Rule also 
states that the Commission may, upon a showing of good cause, order a 
later date for the evidentiary hearing than the one specified in the 
complaint. The deadline for the prehearing scheduling conference and 
order and the more detailed requirements for both are intended to help 
keep the prehearing proceedings on track and enable the parties to 
contribute to a high quality record on which the ALJ can base his or 
her decisions.
    Rule 3.21(c)(2) authorizes the ALJ to extend, upon a showing of 
good cause, any deadline in the scheduling order other than the date of 
the evidentiary hearing. Rule 3.21(f) states that the ALJ shall hold 
additional prehearing and status conferences or enter additional orders 
as may be needed to ``ensure the just and expeditious disposition of 
the proceeding and to avoid unnecessary cost.'' These revisions give 
the ALJ substantial flexibility and discretion to manage particular 
cases.

Section 3.22: Motions.

    The proposed revision to Rule 3.22(a) provided that the Commission 
would resolve in the first instance motions to strike, motions for 
summary decision, and prehearing motions to dismiss, but provided the 
Commission discretion to refer the motion to the ALJ and to set a 
deadline in which the ALJ must rule on the motion. Significantly, the 
Section acknowledged in its comment that ``[e]arlier Commission 
involvement [to resolve dispositive motions] will undoubtedly result in 
more efficient resolution of these issues. Moreover, it will allow the 
Commission to apply its antitrust expertise to matters at an earlier 
stage. Delay occasioned by an erroneous ALJ decision on a dispositive 
motion * * * provides little benefit and exacts a toll on all 
participants in the process.''
    Nonetheless, commenters (including the Section) criticized the 
proposed Rule change as unfairly invading the province of the 
independent ALJ and compromising the Commission's dual roles as 
prosecutor and adjudicator. For example, the Section argued that the 
proposed changes, while ``likely [to] reduce or avoid delay,'' could 
raise concerns about the impartiality and fairness of the Part 3 
proceeding by permitting the Commission to adjudicate dispositive 
issues, including motions to dismiss challenging the facial sufficiency 
of a complaint, shortly after the Commission has voted out the 
complaint finding that it has ``reason to believe'' there was a law 
violation, without the benefit of an opinion by an independent ALJ. The 
Section added that, while ``it may sometimes be desirable for the 
Commission to address dispositive motions in the first instance, 
changing the Part 3 rules to make that the default procedure is 
unnecessary,'' and that ``concern about improving the quality of 
Commission decisions is better addressed by enhancing the antitrust 
expertise of the ALJs.'' The Pitofsky-Sohn comment similarly argued 
that the proposed rules, including Rule 3.22, would arguably infringe 
on the fairness of the Part 3 proceeding if the Commission more 
frequently ``invades what has heretofore been the province of an 
independent ALJ.'' Whole Foods argued that the rule change would 
compromise the independence of the ALJ, who will lose the opportunity 
to ``live with the case,'' will not write his initial decision on a 
``clean slate,'' but will be unduly influenced by the ``entirely 
transparent views of the Commission delivered on less than a full 
record,'' and will lose his ability to effectively manage discovery. 
The Chamber and Blumkin comments similarly argued that this change 
would compromise the ALJ's independent decision making role.
    Commenters, however, provided essentially no legal support for 
their argument that the Commission's resolution of dispositive motions 
in the first instance will unfairly prejudice litigants in Part 3 
proceedings or would violate the APA. Most important, these comments 
failed to undermine the central premise supporting the rule change: 
that the Commission has the authority and expertise to rule initially 
on dispositive motions and that doing so will improve the quality of 
the decisionmaking and (as acknowledged by the Section) will expedite 
the proceeding.\29\ This is because an erroneous decision by the ALJ on 
a dispositive motion dismissing the complaint may lead to unnecessary 
briefing, hearing, and reversal, resulting in substantial costs and 
delay to the litigants. Moreover, the APA does not confer on an ALJ the 
specific authority to rule on dispositive motions, and indeed, permits 
the Commission or Commissioners to act as presiding officers. See 5 
U.S.C. 556(b).\30\ It is

[[Page 1810]]

therefore hard to see how allowing the Commission to rule on 
dispositive motions deprives an ALJ of the independence conferred by 
the APA or is unfair to the parties.
---------------------------------------------------------------------------

    \29\ The Commission has in recent practice retained jurisdiction 
to resolve legal issues raised in a dispositive motion. See, e.g., 
In re S. Carolina State Bd. of Dentistry, 136 F.T.C. 229 (2004) 
(Commission retained jurisdiction to hear motions to dismiss and 
denied at that stage respondent's legal defense that its alleged 
unlawful activities were protected by the state action doctrine).
    \30\ Under the APA, the Commission or one of its Commissioners 
may take evidence at the hearing, 5 U.S.C. 556(b), and the 
Commission, on appeal or review, may make its own legal 
determinations and de novo factual findings from the hearing record. 
See, e.g., 5 U.S.C. 557(b) (``On appeal from or review of the 
initial decision, the agency has all the powers which it would have 
in making the initial decision except as it may limit the issues on 
notice or by rule.'').
---------------------------------------------------------------------------

    Codifying this approach will likely expedite the proceedings and 
save litigants resources to the extent the case is dismissed or the 
issues narrowed by the resolution of the legal or public interest 
issue. For example, a Commission order denying a motion to dismiss can 
articulate the legal standard to be applied to the facts alleged in the 
complaint and can be a useful tool to apply as facts are developed 
during discovery.\31\
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    \31\ Whole Foods mistakenly asserted that by deciding 
dispositive motions, such as motions for summary decision, the 
Commission will be taking away the independent role of the ALJ to 
interpret facts and parse the evidentiary record. On the contrary, 
such motions inherently do not resolve factual disputes, but rather 
resolve legal or policy issues where there are no genuine issues of 
material facts in dispute. This commenter acknowledged that motions 
raising ``purely legal defenses'' might be appropriate for the 
Commission to resolve.
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    Concerns raised by the Section that this rule change will result in 
``the practical unavailability of a motion to dismiss'' because the 
Commission had just previously found there to be a ``reason to 
believe'' there was a law violation, are without support and are 
refuted by recent Commission practice.\32\ Further, the logic of the 
argument about the benefit of delaying the Commission's involvement 
with the legal issues in a case would cast doubt on any effort to 
significantly reduce the time it takes for a case to reach the 
Commission for a final decision on both the law and the facts of the 
case. Indeed, the Section's proposal that the Commission issue a final 
decision in all unconsummated merger cases within five months after 
issuance of the complaint would have the Commission resolve the facts 
and law of the case within a few months after it voted to bring the 
case.
---------------------------------------------------------------------------

    \32\ See, e.g., S. Carolina State Bd. of Dentistry, 136 F.T.C. 
229 (denying respondent's motion to dismiss on state action grounds, 
but refusing to deny respondent's motion to dismiss on mootness 
grounds as urged by complaint counsel in favor of remanding to ALJ 
for limited discovery on mootness issue).
---------------------------------------------------------------------------

    The Commission also proposed in paragraph (a) that rulings on 
motions to dismiss based on the alleged failure to establish a prima 
facie case would be deferred until after the hearing record is closed, 
and eliminated the provision in the previous Rule for a recommended 
ruling by the ALJ when certifying to the Commission a motion outside 
his or her authority to decide. The Commission received no comments on 
these proposals and they have been adopted as proposed.
    Proposed paragraph (b) required that proceedings before the ALJ not 
be stayed during the Commission's consideration of the motion, unless 
otherwise ordered by the Commission. The Commission has revised the 
caption of paragraph (b) to ``Proceedings not stayed,'' to more 
accurately describe the subject matter of the paragraph. Proposed 
paragraph (e) required the ALJ to decide all motions within 14 days of 
the filing of all motion papers unless otherwise provided by rule or if 
the Commission extends the time for good cause. The purpose of proposed 
paragraph (b) was to ensure that discovery and other prehearing 
proceedings continue while the Commission deliberates over the 
dispositive motions, and paragraph (e) is similarly intended to 
expedite the proceedings. The Section objected that eliminating the 
stay for pre-answer motions will result in inadequate review of the 
sufficiency of a complaint, but as explained above, the Commission's 
complaints tend to be highly detailed and, in any event, respondents 
retain the right to challenge the sufficiency of a complaint by filing 
a motion to dismiss. Except for the revision of the caption of 
paragraph (b), paragraphs (b) and (e) are adopted as proposed.
    The Section commented, however, that by not staying the Part 3 case 
during the pendency of a dispositive motion before the Commission and 
with no deadlines imposed on the Commission to resolve such motions, 
litigants (and the ALJ) will be disadvantaged by not knowing the 
precise scope of the issues to be addressed at the hearing or, indeed, 
whether there will be any hearing at all. The Commission agrees and has 
therefore revised paragraph (a) to require that the Commission resolve 
any dispositive motion within 45 days of the filing of the motion 
papers unless it finds there to be good cause for an extension. In 
those cases where the Commission grants a dispositive motion, that 
decision will constitute the agency's final decision in the case, and 
this 45 day period for deciding dispositive motions is therefore the 
same amount of time as the Commission has allocated for issuing its 
final decision following oral argument in cases where the Commission 
has sought relief under Section 13(b).
    Proposed paragraph (c) also imposed word count limits on motion 
papers. Briefs in support of, and in opposition to, dispositive motions 
were to be limited to 10,000 words (approximately 40 double-spaced 
pages), and briefs in support of, and in opposition to, non-dispositive 
motions were limited to 2,500 words (approximately 10 double-spaced 
pages). The Commission received no comments on these word count 
limitations and they have been adopted as proposed.
    Proposed paragraph (d) provided an automatic right of reply in 
support of dispositive motions, stated that reply and surreply briefs 
in support of non-dispositive motions ``shall be permitted only in 
circumstances where the parties wish to draw the ALJ's or the 
Commission's attention to recent important developments or controlling 
authority that could not have been raised earlier in the party's 
principal brief,'' and imposed a five day filing deadline for any 
authorized reply to a motion. No comments were received on these 
provisions and they are adopted as proposed.
    The other proposed changes to Rule 3.22, such as eliminating 
previous paragraph (e) and redesignating previous paragraph (f) as 
paragraph (g), generated no comments and are adopted.

Section 3.23: Interlocutory appeals.

    The Commission proposed amendments to Rule 3.23 that would expedite 
consideration by the ALJ and the Commission of certain applications by 
a party that seek discretionary review of an interlocutory ruling by 
the ALJ. As noted in the NPRM, the proposal left unchanged in paragraph 
(a) the types of rulings that the parties can ask the Commission to 
review without a determination by the ALJ that interlocutory review is 
appropriate.
    In paragraph (b), the proposal continued to allow applications for 
interlocutory review of other rulings only on a determination that the 
ruling ``involves a controlling question of law or policy as to which 
there is substantial ground for difference of opinion and that an 
immediate appeal from the ruling may materially advance the ultimate 
termination of the litigation or subsequent review will be an 
inadequate remedy.'' In order to reduce delay, the Commission proposed 
requiring the ALJ to make his or her determination whether the 
application for review involves such a controlling question within 
three days after the filing by a party of a request for such a 
determination. The revision eliminated the requirement that the ALJ 
provide a

[[Page 1811]]

written justification for his or her determination. It also allowed the 
party to file its application for review with the Commission if the ALJ 
does not make a timely ruling on its request for a determination on the 
appropriateness of review. The Commission adopts these revisions as 
proposed.
    Because the pendency of an application for review may leave a cloud 
over the proceeding before the ALJ, paragraph (d) of the proposed Rule 
would have treated the failure of the Commission to act within three 
days as a denial of the application. As suggested by the Section's 
comment, the Commission has eliminated this default provision and the 
Rule now requires instead that the Commission decide whether to 
entertain an appeal within three days after the filing of the answer to 
the application. The Commission has also adopted the Section's 
suggestion that the Rule make explicit that the denial of an 
application does not constitute a ruling on the merits of the appeal.
    Also, to avoid unnecessary delay, the proposed Rule set shorter 
deadlines than the previous Rule for the filing of applications and 
answers and, to reduce burdens, imposed tighter limits than the 
previous Rule on the length of these filings. No comments were received 
on these provisions and the Commission has adopted them.

Section 3.24: Summary decisions.

    Proposed paragraph (a), in conjunction with proposed Rule 3.22, was 
revised to permit the Commission in the first instance to resolve 
dispositive motions unless referred by the Commission to the ALJ. This 
proposal was criticized by many of the commenters as improperly 
infringing on the independence of the ALJ. These commenters asserted 
that, after the Commission issues a complaint, it should not intervene 
in the Part 3 proceedings until after the ALJ has conducted the Part 3 
hearing and issued an initial decision. As noted in the analysis of 
Rule 3.22, the Commission may properly make initial rulings on 
dispositive motions presenting legal or public interest issues and 
doing so does not infringe on the ALJ's ability to preside over the 
evidentiary hearing and issue an initial decision.
    Proposed paragraph (a) also required that summary decision motions 
be filed no later than 30 days before the evidentiary hearing instead 
of 20 days as in the unamended Rule. The proposed Rule also extended 
the deadline for filing affidavits in opposition to a summary decision 
motion from 10 to 14 days in order to provide the nonmoving party more 
time to oppose the motion where the moving party may have had months in 
which to prepare its summary decision brief and supporting papers. No 
comments were received on these proposals and they are therefore being 
adopted.
    Proposed paragraph (a) also eliminated the previous 30 day deadline 
for ruling on a motion for summary decision but allowed the Commission 
to set a deadline for a decision when referring such a motion to the 
ALJ. As discussed above, several commenters complained that the lack of 
a Commission deadline to rule on dispositive motions while the Part 3 
case is proceeding may unfairly prejudice litigants who do not know if 
or how the issues will be narrowed before the beginning of the 
evidentiary hearing. In response, in Rule 3.22 the Commission has 
imposed on itself a 45 day deadline to resolve dispositive motions. As 
noted earlier, this 45 day period for deciding dispositive motions is 
the same amount of time as the Commission has allocated for issuing its 
final decision following oral argument in cases where the Commission 
has sought relief under Section 13(b).
    Finally, commenter Nagin suggested that, where an affidavit in 
support of or in opposition to a motion for summary decision is filed 
in bad faith, the list of possible disciplinary actions under Rule 
3.24(b) be expanded, from ``reprimand, suspension or disbarment'' to 
include ``notice to all professional licensing, registration and 
certification entities to which a lawyer is subject to discipline.'' 
The Commission has the authority to refer unethical conduct to state 
bar associations and does not believe that a special provision for this 
is needed in the Rule on summary decisions.

Section 3.26: Motions following denial of preliminary injunctive 
relief.

    Rule 3.26 was first adopted in connection with a 1995 Policy 
Statement, which explained that the Commission takes a case-by-case 
approach in deciding whether to pursue administrative litigation of a 
merger case following the denial of a preliminary injunction in federal 
court.\33\ Many commenters objected to the Commission's proposal to 
eliminate provisions in the Rule for automatic withdrawals from 
adjudication or stays when a party moves for withdrawal or to dismiss 
after the Commission loses a motion for preliminary injunction in a 
merger case. Several commenters argued that the Commission should not 
pursue administrative litigation in merger cases if it loses its 
application for a preliminary injunction. Of course, if the Commission 
were to adopt a policy uniformly disclaiming any intent to pursue the 
Part 3 adjudication on the merits after losing a preliminary 
injunction, there would be no need for Rule 3.26 at all. The Commission 
does not choose to take that approach and instead adheres to the case-
by-case approach of the 1995 Policy Statement.
---------------------------------------------------------------------------

    \33\ 60 FR 39741 (1995).
---------------------------------------------------------------------------

    Several comments argued that, by stating in the NPRM that 
continuation of the Part 3 adjudication after loss of a preliminary 
injunction should be the ``norm,'' the Commission's proposed amendment 
amounted to a reversal of its 1995 Policy Statement. According to that 
Statement,
 [I]t would not be in the public interest to forego an administrative 
trial solely because a preliminary injunction has been denied. Nor 
would it be in the public interest to require an administrative trial 
in every case in which a preliminary injunction has been denied. Thus, 
a case-by-case determination is appropriate. This approach gives the 
Commission the opportunity to assess such matters as (i) the factual 
findings and legal conclusions of the district court or any appellate 
court, (ii) any new evidence developed during the course of the 
preliminary injunction proceeding, (iii) whether the transaction raises 
important issues of fact, law, or merger policy that need resolution in 
administrative litigation, (iv) an overall assessment of the costs and 
benefits of further proceedings, and (v) any other matter that bears on 
whether it would be in the public interest to proceed with the merger 
challenge.\34\
---------------------------------------------------------------------------

    \34\ Id. at 39743.
---------------------------------------------------------------------------

    The 1995 Statement, however, offered no view on whether the typical 
outcome of a case-by-case analysis would be to continue or to abandon 
Part 3 litigation. The Pitofsky-Sohn comment states that ``articulating 
such a `norm' leaves the impression that the Commission will take 
little or no notice of what preliminary injunction courts have to say'' 
and points out that the NPRM was ``silent with respect to whether any 
or all of the factors [listed in the 1995 Statement and quoted above] 
will continue to be considered.''
    The Commission continues to consider the five factors as highly 
relevant to any determination whether to proceed with Part 3 and 
anticipates that the parties will address them in their motion papers 
and, if a motion for withdrawal is granted, in their presentations 
during the time the case is

[[Page 1812]]

withdrawn. The Commission, of course, will also continue to consider 
caref