Agency Information Collection Activities; Proposed Collection; Comment Request, 34415-34422 [2015-14707]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 80, Number 115 (Tuesday, June 16, 2015)]
[Notices]
[Pages 34415-34422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14707]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Proposed Collection; 
Comment Request

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

ACTION: Notice and request for comment.

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SUMMARY: The Commission plans to conduct a remedy study to update and 
expand on the divestiture study it conducted in the mid-1990s to: (1) 
Assess the effectiveness of the Commission's policies and practices 
regarding remedial orders where the Commission has permitted a merger 
but required a divestiture or other remedy, and (2) identify the 
factors that contributed to the Commission successfully or 
unsuccessfully achieving the remedial goals of the orders. This is the 
second of two notices required under the Paperwork Reduction Act 
(``PRA'') in which the FTC seeks public comments on its proposed study 
in connection with Office of Management and Budget (``OMB'') review of, 
and clearance for, the collection of information discussed herein.

DATES: Comments must be received on or before July 16, 2015.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``Remedy Study, FTC File 
No. P143100'' on your comment. File your comment online at https://ftcpublic.commentworks.com/ftc/hsrdivestiturestudypra2, by following 
the instructions on the web-based form. If you prefer to file your 
comment on paper, mail your comment to the following address: Federal 
Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., 
Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment 
to the following address: Federal Trade Commission, Office of the 
Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 
5610 (Annex J), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Daniel P. Ducore, Assistant Director, 
202-326-2526, Compliance Division, Bureau of Competition, Federal Trade 
Commission, Washington, DC 20580, or Timothy Deyak, Associate Director, 
202-326-3742, Bureau of Economics, Federal Trade Commission, 
Washington, DC 20580.

SUPPLEMENTARY INFORMATION: 

I. Background

    Each year, the FTC, along with the Antitrust Division of the 
Department of Justice, challenges a number of transactions that are 
alleged to violate the antitrust laws. Most of these challenged 
transactions are resolved through a consent order that remedies the 
competitive concern. Taking advantage of its unique research and study 
function, the Commission began a study in 1995, evaluating remedial 
divestitures the Commission ordered from 1990 through 1994. The earlier 
study focused on the thirty-five divestiture orders the Commission 
issued over that four-year period. FTC staff interviewed thirty-seven 
buyers out of the fifty that acquired divested assets. The study 
yielded valuable information, which was synthesized, summarized, and 
made available to the public in a

[[Page 34416]]

report in August 1999. The report is available at https://www.ftc.gov/sites/default/files/attachments/merger-review/divestiture.pdf.
    The Commission refined and improved its divestiture orders partly 
as a result of that study. Those improvements included shortening the 
divestiture period, more often requiring up-front buyers, and requiring 
monitors more frequently, particularly in divestitures in technology 
and pharmaceutical industries. These changes were implemented almost 
immediately, and the Commission and its staff still rely on the 
findings from the study as they craft and enforce the Commission's 
remedies.
    Given the benefits resulting from the prior study, on January 16, 
2015, the Commission published a Federal Register Notice (``FRN''), see 
80 FR 2423, seeking comment under the PRA on a new FTC remedy study 
that will focus on more recent orders, spanning the years 2006 through 
2012, and will evaluate both structural and non-structural relief. In 
response to the PRA Notice, the Commission received four comments 
related to the proposed remedy study. These four comments are available 
at https://www.ftc.gov/policy/public-comments/initiative-602.

II. FTC's Proposed Study

A. Study Description

    Between the end of 1994 and 2013, the Commission issued 281 orders 
in merger cases. Of those, the Commission proposes to study all ninety 
orders issued from 2006 through 2012.\1\ The Commission chose this 
period because it is sufficiently long ago to assess the order's impact 
(i.e., whether divestiture orders created new competitors and whether 
merger orders, including divestiture orders, achieved their remedial 
goals), but recent enough so that participants will remember relevant 
facts and events.
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    \1\ The January 16, 2015 FRN stated that the study would include 
92 orders. Two of those orders, C4231, In the Matter of Flow 
International Corp., and C4299, In the Matter of Air Products and 
Chemicals, Inc., relate to transactions that were abandoned. 
Accordingly, those have been eliminated from the proposed remedy 
study.
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    Given the scope of the proposed study and to best use its 
resources, the Commission will use different methodologies to evaluate 
different orders. The Commission proposes to evaluate the majority of 
the orders using a case study methodology similar to that used in the 
earlier study, consisting of interviews with buyers of divested assets, 
customers, and competitors, and seeking limited sales information from 
the divestiture buyer and other major competitors. For orders relating 
to supermarkets, drug stores, funeral homes, hospitals and other 
healthcare clinics, the Commission proposes to study information from 
divestiture buyers through voluntary questionnaires. For orders 
relating to the pharmaceutical industry, the Commission proposes to 
study information it already has, as well as publicly available 
information.
    The Commission proposes to use the case study methodology for 
fifty-one of the ninety orders in the proposed study. The Appendix 
identifies the fifty-one orders in chronological order based on the 
date first accepted by the Commission. Of those fifty-one orders the 
Commission issued during this period, forty-one required divestitures 
to fifty-six different Commission-approved buyers.\2\ The Commission 
proposes interviewing those fifty-six buyers and, on average, two other 
significant competitors in each affected market, including the 
respondent. Additionally, the Commission proposes to interview, on 
average, two customers in each affected market. For the ten orders in 
which the Commission ordered only non-structural relief, and where 
there are therefore no buyers, the Commission proposes interviewing, on 
average, two significant competitors in each affected market, including 
the respondent, and, on average, two customers in each affected market.
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    \2\ The January 16, 2015 FRN stated that the study would involve 
47 different divestiture buyers. Upon further review, staff has 
determined that 56 buyers purchased divested assets relating to the 
orders included in the proposed study.
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    Although the FTC will seek voluntary interviews in the first 
instance, it may rely on compulsory process where necessary to obtain 
the information needed for the study. Each interview will, to the 
extent possible, be conducted by attorneys and economists who are 
familiar with the relevant order from their work when it issued. Each 
interviewer will use similar outlines for the interviews, focusing 
broadly on the same topics. To the extent unique issues arise regarding 
particular divestitures, the interviewer will pursue those issues as 
well.
    Although the buyer interviews will be similar to those in the 
earlier study, staff will focus on several specific issues, some of 
which address the changes made to the divestiture process based on the 
earlier study. Those issues include:
     Whether the increased use of buyers-up-front hindered the 
buyer's ability to conduct adequate due diligence.
     Whether shortening the divestiture period had any adverse 
effect on the buyers or the process.
     To what extent the staff's review of buyers and monitors 
may have been inadequate.
     Whether the orders have effectively defined the assets of 
an autonomous business (when that was the purpose).
     Whether assets outside of the relevant market have been 
properly included in the divestiture package when necessary.
     Whether Commission orders have effectively required 
sufficient technical assistance or other nurturing provisions when 
necessary.
     Whether monitors have provided the oversight that the 
circumstances warranted.
     Whether the respondent impeded the buyer's ability to 
compete in the market.
    As noted above, in addition to interviewing buyers, the Commission 
will also interview customers and other competitors, including the 
respondent, in each affected market. The additional interviews will be 
used, along with the buyer interviews, to assess further whether the 
Commission's orders achieved their remedial goals. These interviews 
will, where appropriate, cover some of the issues noted above, and 
address some additional points, including:
     Identification of the leading suppliers (and their market 
shares) before and after the remedy.
     Whether the buyer competed in a manner that was as 
effective as the prior owner of the divested assets.
     Whether any other significant changes occurred in the 
market after the remedy was implemented (e.g., entry, exit, or other 
merger).
     The interviewee's views on how the merger would have 
affected the competitive environment absent the remedy.
     The interviewee's views about the market's competitiveness 
before and after the merger and remedy.
    In addition to conducting interviews, the FTC will require 
information from each buyer and significant competitor, including the 
respondent, in each market by issuing orders to file special reports 
under its authority in Section 6(b) of the FTC Act. Information will be 
sought from about 250 firms operating in approximately 190 distinct 
product or geographic markets.\3\ For each of the markets identified in 
the order, the

[[Page 34417]]

special reports will request annual unit and dollar sales data for 
seven years, centered on the year the remedy took place.\4\ These data 
are sufficiently limited in scope to enable the Commission to use them 
in a timely and useful manner to supplement and complement information 
received during the interviews.\5\
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    \3\ This number is lower than the 280 participants estimated in 
the January 16, 2015 FRN because, upon further review, staff has 
determined that there are fewer significant competitors in the 
markets affected by the 51 orders.
    \4\ If the order became final in the first six months of the 
year, then that year will be used as the year the remedy took place. 
If the order became final in the last six months of the year, then 
the following calendar year will be used as the year the remedy took 
place.
    \5\ If a company has fiscal year dollar and unit sales figures 
that are not calendar year sales, it will be asked to describe its 
fiscal year, to provide the data requested for the company's fiscal 
years closest to the calendar years requested, to estimate the 
requested calendar year dollar and unit sales, and to describe the 
basis upon which those estimates were made. If the requested data 
are not available for the product and the geographic market, the 
company will be asked to estimate the dollar and unit sales data 
requested and to describe the basis upon which its estimates were 
made.
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    The Commission proposes to use different methods to evaluate merger 
orders in certain industries where the Commission has extensive 
expertise crafting remedies: Supermarkets, drug stores, funeral homes, 
hospitals and other healthcare clinics, and pharmaceuticals. Because of 
this experience, the Commission uses well-established methods and 
standard provisions tailored to each industry, and, accordingly, staff 
is less likely to uncover any significant new information regarding the 
structure of Commission remedies in these industries. As identified in 
the Appendix, in those markets, the Commission issued fifteen orders 
requiring over forty divestitures between 2006 and 2012. For these 
orders, the Commission proposes sending voluntary questionnaires to the 
buyers of the divested assets. Through the questionnaire, the 
Commission intends to learn about the buyer's due diligence process, 
the adequacy of the divestiture package and the transitional services, 
and the buyer's post-divestiture operations. Staff will determine, on a 
case-by-case basis, whether follow-up interviews with these buyers may 
be necessary.
    For the twenty-four orders that the Commission issued from 2006 
through 2012 requiring divestitures in the pharmaceutical industry, 
staff will synthesize information already in the Commission's 
possession. The Bureau of Competition's Compliance Division maintains 
close contact with the monitors appointed in these orders, and the 
monitors and respondents file periodic reports as required by the 
orders. As a result, the FTC has substantial information regarding the 
competitive dynamics of these divested products. Staff will review the 
information already in its possession and will follow-up with 
interviews with the monitors, buyers, and customers as needed.

B. PRA Burden Analysis

    In its January 16, 2015 FRN, the FTC provided PRA burden estimates 
for the research. FTC staff is revising certain assumptions based on a 
more precise calculation of the number of relevant orders, buyers, and 
market participants in each order.
    As described above, one component of the proposed study concerns 
fifty-one merger orders approving fifty-six buyers of divested assets. 
Commission staff will attempt to interview those buyers as well as, on 
average, two customers and two competitors of each buyer in each 
affected market. The number of interviews conducted for each will vary 
based on the unique characteristics of each order. Ten of the fifty-one 
orders required only non-structural relief, so there are no buyers for 
those ten; the Commission proposes to interview, on average, two 
customers and two competitors in each of those affected markets. In 
several of the orders, the remedy applies to more than one relevant 
geographic or product market, even though there may be only one buyer 
of divested assets (or no buyer in the orders requiring only non-
structural relief). Because a single buyer may operate in more than one 
geographic or product market, there may be different customers and 
competitors in each of the different markets.
    In the January 16, 2015 FRN, FTC staff preliminarily estimated that 
there would be approximately ten orders implicating multiple markets 
that require interviews with additional customers and competitors. 
However, staff has now determined that because many of the same 
entities compete or are customers in more than one of the markets 
affected by a single consent, this number is actually smaller. 
Consequently, approximately 300 interviews will be required, rather 
than the 315 estimated in the January 16, 2015 FRN.
    Commission staff expects that for each interview, two company 
personnel will participate: Top-level managers (possibly the CEO or 
president) and a marketing or sales manager. In addition, in many 
cases, a company will likely request that its attorney also 
participate. Staff anticipates that the interviews will last 
approximately an hour to an hour-and-a-half, and that an hour of 
preparation time for each interviewee and three hours for the attorney 
may be required. Accordingly, the estimated total time involved for 
this portion of the study will be 2,850 hours [300 interviews x (4.5 
interview hours + 5 preparation time hours)].
    Based on external wage data, the estimated hourly wages for the 
expected participants are:

CEO $655
Sales/Marketing Manager $215
Attorney $135

    If all three individuals participate for each firm, total wage 
costs for each firm, rounded, will be approximately $2,783 [($655 x 
2.5) + ($215 x 2.5) + ($135 x 4.5)]. If FTC staff interviews 300 
different entities, the estimated total labor cost for this part of the 
study will be $834,900 [300 x $2,783].
    As another component of the study, the FTC proposes sending brief 
questionnaires to the approximately forty buyers of divested assets in 
the fifteen orders issued from 2006 through 2012 requiring the 
divestiture of supermarkets, drug stores, funeral homes, or hospitals 
and other healthcare clinics. Commission staff estimates that the CEO 
or other top-level manager and a marketing or sales manager will spend 
one and two hours, respectively, to complete the questionnaire, 
followed by approximately three hours for attorney review. The 
estimated total time involved for three participants in this part of 
the study will be 240 hours [40 participants x 6 hours]. Commission 
staff anticipates that respondents will incur primarily labor costs to 
complete the questionnaire, with total wage costs for each firm 
estimated at $1,490 [$655 + ($215 x 2) + ($135 x 3)]. Staff anticipates 
obtaining completed questionnaires from the approximately forty buyers, 
resulting in total labor costs of $59,600 [40 x $1,490].
    As the final component of this study, the FTC proposes obtaining 
and analyzing sales data to complement the information obtained in the 
interviews and to aid in the overall assessment of whether the orders 
achieved their remedial goals. As noted above, for each of the markets 
remedied by each order, the FTC will issue orders to file special 
reports requesting seven years of annual sales data (in units and 
dollars), centered on the year in which the order became final, for all 
significant competitors in each remedied market. For most firms, these 
data are likely maintained as a part of their normal course of business 
and the request should not pose a significant burden. While the 
majority of these fifty-one remedied matters involve only a single 
market, others implicate multiple

[[Page 34418]]

geographic and product markets. The FTC anticipates sending orders to 
file special reports to competitors in approximately 190 product and 
geographic markets, and that approximately 250 market competitors will 
receive the orders. FTC staff estimates that three people will be 
involved in the response to each order to file special report and that 
the total time involved in responding to each report will be ten hours. 
Accordingly, the total amount of time involved for the participants in 
this part of the study will be approximately 2,500 hours [250 orders to 
file special reports x 10 hours/report].
    The majority of the costs incurred for compliance with the orders 
to file special reports will be labor costs. FTC staff anticipates that 
a top-level financial manager, an accountant or financial analyst, and 
an attorney will be involved in any discussions relating to the special 
reports and in responding to the orders to file special reports. 
Specifically, FTC staff anticipates that each of these individuals 
would be involved in a two-hour discussion with staff prior to 
compliance, and that the financial analyst would require four hours to 
compile the data. Based on external wage data, the estimated hourly 
wages for the expected participants are:

Financial Manager $75
Accountant $55
Attorney $135

    Total labor costs for each special report will be $750 [($75 x 2) + 
($135 x 2) + ($55 x 6)]. If the Commission issues 250 orders to file 
special reports, the total labor cost of complying with compulsory 
process will be $187,500 [250 x $750]. Commission staff anticipates 
minimal capital or other non-labor costs.

III. Confidentiality

    Some of the information the Commission will receive in connection 
with the study is information of a confidential nature. Under Section 
6(f) of the FTC Act, such information is protected from public 
disclosure for as long as it qualifies as a trade secret or 
confidential commercial or financial information. 15 U.S.C. 46(f). 
Material protected by Section 6(f) also would be exempt from disclosure 
under the Freedom of Information Act, 5 U.S.C. 552. Moreover, under 
Section 21(c) of the FTC Act, a submitter who designates information as 
confidential is entitled to 10 days' advance notice of any anticipated 
public disclosure by the Commission, assuming that the Commission has 
determined that the information does not, in fact, constitute Section 
6(f) material. 15 U.S.C. 57b-2(c). Although materials covered by these 
sections are protected by stringent confidentiality constraints, the 
FTC Act and the Commission's rules authorize disclosure in limited 
circumstances (e.g., official requests by Congress, requests from other 
agencies for law enforcement purposes, and administrative or judicial 
proceedings). Even in those limited contexts, however, the Commission's 
rules may afford protections to the submitter, such as advance notice 
to seek a protective order prior to disclosure in an administrative or 
judicial proceeding. See 15 U.S.C. 57b-2(c); 16 CFR 4.9-4.11.

IV. Analysis of Comments

    As referenced above, in response to the January 16, 2015 FRN, the 
Commission received four comments related to the proposed study. A 
majority of the commenters support the need for the FTC's proposed 
study and recognize the importance of the modifications that the 
Commission has implemented, largely as a result of its prior study of 
merger orders. Each commenter, however, suggests what he or she views 
as improvements to the proposed study.
    Kenneth Davidson, a former FTC staff attorney who, as he noted, was 
significantly involved in the design and implementation of the earlier 
study, suggests that the Commission narrow the scope of the study to 
focus on whether the recommendations of the prior study have been 
implemented in more recent orders and, in orders in which they have 
not, whether the failure to do so had an impact on the effectiveness of 
the remedy. Dr. John Kwoka, a professor of economics at Northeastern 
University, and the American Antitrust Institute (``AAI''), a non-
profit advocacy group that focuses on antitrust issues, both suggest 
that the Commission expand the study significantly and question whether 
the scope of the data to be collected will be sufficient. Finally, the 
Electronic Privacy Information Center (``EPIC''), a non-profit advocacy 
group that focuses on privacy issues, recommends a shift in the focus 
of the study to include privacy issues, a topic not studied in the 
prior study and not addressed in the orders proposed to be studied. 
Each comment is described in more detail below, and Commission 
responses follow.

A. Kenneth Davidson Comment

    Mr. Davidson supports further study of remedies but has several 
concerns regarding the structure of the proposed study. First, he 
believes any further study should be voluntary and anonymous, as the 
earlier study was. He believes much of the valuable information 
disclosed in the earlier interviews was made available because of the 
voluntary, confidential nature of the interview. Mr. Davidson suggests, 
as an alternative to the proposed interviews, that in future orders the 
Commission require buyers of divested assets to file compliance 
reports. Second, he describes the study as relying ``primarily on the 
enforcement attorney and the economist who investigated the antitrust 
violation'' and asserts that such reliance may result in biased and 
inconsistent results. He instead recommends using two or three 
Compliance Division attorneys and the same number of economists to 
provide expertise and assure more consistency, similar to the structure 
used in the prior study.
    Mr. Davidson also believes the number of orders included in the 
study imposes too much burden on limited resources and recommends 
selecting a smaller subset of divestitures to study, starting with 
those identified as problematic. In particular, he urges that the study 
focus on the orders in which the changes recommended by the prior study 
were not implemented to determine whether that may have led to problems 
with the remedy. Mr. Davidson suggests several considerations for the 
interviews, including requesting a timeline of milestones for the 
entire process from both the buyer of the divested assets and the 
seller to help assess the pacing of divestitures. Finally, Mr. Davidson 
contends that the requested data will have limited use and questions 
the value of using the Commission's compulsory process authority to 
obtain it. He suggests, instead, that profits or costs might be better 
measures of competitive impact; however, he acknowledges the difficulty 
in obtaining consistent data allowing for reliable comparisons. He 
recommends that the Commission consider voluntary submissions of data, 
rather than using compulsory process. He also recommends that the 
Commission provide greater detail about how the data will be used.
Commission Response
    1. The confidential information of participants will be protected.
    Section 6(f) of the Federal Trade Commission Act protects 
confidential information from public disclosure for as long as it 
qualifies as a trade secret or confidential commercial or financial 
information. 15 U.S.C. 46(f). In issuing

[[Page 34419]]

any report on the study, the Commission will take appropriate steps to 
protect such information or to give notice before any public disclosure 
of such information, as specified further below. Accordingly, we do not 
anticipate that the use of compulsory process here will affect the 
quality of responses received.
    2. Because of the importance of the sales data requested, the 
Commission has decided to use its authority under Section 6(b) of the 
FTC Act to require submission of the data.
    Although FTC staff agrees that the prior study yielded valuable 
information, very little of the financial data that FTC staff requested 
from participants on a voluntary basis in the prior study was 
submitted, as Mr. Davidson acknowledges. The proposed study is designed 
to obtain sales data from each buyer and significant competitors. 
Because of the potential value of that information and the need to 
obtain that information from market participants, the Commission has 
decided to compel its production under Section 6(b) of the Federal 
Trade Commission Act to ensure that participants provide the desired 
information.
    3. Attorneys and economists who were involved in the initial 
investigation will add significantly to the evaluation of the 
Commission's remedies, and their participation will enable the FTC 
staff to complete the interview component of the study in a timely 
manner.
    The study will engage teams of experienced professionals to conduct 
the interviews, including, where possible, the enforcement attorney and 
economist who conducted the antitrust investigation of the underlying 
merger, the Compliance Division attorney who handled the remedy aspect, 
and a paralegal or research analyst. The attorneys and economists who 
were involved in the initial investigation will bring significant 
knowledge of the industry and the parties to the process and will use 
that background to add significantly to the quality of the interviews. 
In addition, FTC staff supervising the overall study, who were not 
involved in the initial investigation, will attend the interviews. 
Relying on multiple teams, including the investigative staff, to 
conduct the interviews will enable FTC staff to complete the interviews 
more quickly and effectively than relying solely on Compliance Division 
staff.
    An initial meeting will be held with each case team prior to the 
interviews to review the issues raised by the remedy. Consistency will 
be maintained from interview to interview by relying on standardized 
outlines prepared by FTC staff, which will be adapted for the order and 
markets at issue consistent with the issues discussed at the initial 
meeting. Mr. Davidson points out several interesting topics for the 
interviews, and FTC staff has added them to the interview outlines. 
Obtaining timeline information where possible will help the Commission 
determine whether its timing assumptions are correct.
    Mr. Davidson is concerned that the scope of the study may tax the 
Commission's resources, but the study is structured to meet its goals 
without placing undue burden on participants or Commission resources. 
The Commission believes that the scope of the study is manageable, 
particularly as structured in the manner described. The Commission 
further believes that limiting the study to only remedies raising 
concerns, as Mr. Davidson suggests, would limit the learning. Valuable 
lessons for the Commission's mission may be derived equally from 
successful and unsuccessful remedies alike.
    Finally, Mr. Davidson believes that the annual dollar and unit 
sales information will be of limited value beyond confirming claims of 
the buyers that they are participating in the market. He suggests it 
may be difficult to compare before and after divestiture performance 
and that additional investigation will be needed to understand the 
data. The Commission believes, however, that the data will be useful in 
confirming those claims of the buyers. More generally, combining this 
information with the qualitative information obtained through the 
interviews will enable the Commission to assess whether the order has 
achieved its remedial goals.

B. Dr. John Kwoka and AAI Comments

    Dr. Kwoka and AAI offer similar suggestions for improving the 
study. First, Dr. Kwoka suggests that the Commission state more clearly 
the criteria for a successful remedy. He states that ``[t]he criterion 
for a successful remedy is that it preserve or restore the competition 
that would otherwise be lost as a result of the merger being 
approved.'' Next, Dr. Kwoka suggests that the Commission consider 
adding some pre-2006 orders, especially orders that required only non-
structural relief. He also is concerned that the study too heavily 
relies on information obtained in the interview portion of the study, 
and notes that interviews are not being conducted in all components of 
the study. Dr. Kwoka questions that failure to adhere to the same 
methodology throughout the study, which could lead some readers to find 
the results less convincing. He also suggests that the Commission 
consider collecting information beyond the sales data it will be 
collecting, including information on non-price variables such as 
expenditures on research and development. He suggests that the 
Commission use a more flexible time frame that may vary with each 
order, because the proposed seven-year time frame may not be the most 
appropriate time frame for each remedy. Finally, he suggests that the 
Commission obtain information about monitors and trustees, particularly 
the procedures used by these third parties, the contractual 
arrangements, the costs imposed by their use, and their effectiveness.
    AAI also suggests providing a clearer articulation of the criteria 
for evaluating a successful remedy. Like Dr. Kwoka, AAI suggests that 
the appropriate standard for determining a successful remedy is whether 
the remedy ``fully restore[s] competition that would otherwise be lost 
as a result of an anticompetitive merger.'' AAI asserts that without a 
clearly articulated standard the design of the proposed study will 
merely validate the conclusions of the prior study. AAI also suggests 
expanding the number of orders studied to include all orders the 
Commission has issued since the prior study as well as Department of 
Justice merger decrees. In addition, AAI suggests that FTC staff study 
the effects of mergers that the Commission did not remedy. AAI also 
recommends expanding the time period covered by the study in order to 
capture more remedies in which the Commission required non-structural 
relief. AAI urges that the FTC staff also interview firms that have 
exited or never entered the market because the design relies too 
heavily on interviews of current participants in the markets of concern 
to the Commission. Like Dr. Kwoka, AAI believes that the portion of the 
study designed to evaluate divestitures in the pharmaceutical industry 
and of supermarkets, drug stores, funeral homes, and hospitals and 
other healthcare clinics is too narrow. Regarding the data collection, 
AAI believes that the seven-year time frame may not be the correct 
choice in certain cases, and that the Commission should also seek non-
price metrics, such as quality and reliability.
Commission Response
    1. The Commission agrees that an appropriate standard by which we

[[Page 34420]]

evaluate the effectiveness of each remedy is necessary, and has 
articulated clear criteria consistent with that suggested by the 
commenters.
    The prior study focused on whether the buyer of the divested assets 
obtained the assets it needed and whether it competed in the market of 
concern to the Commission after the divestiture. There was some 
criticism at the time that the study did not go further to evaluate 
whether the remedy achieved the remedial goal of the order. The 
proposed study addresses that criticism and has been designed to 
``assess whether divestiture orders created new competitors and whether 
merger orders, including divestiture orders, achieved their remedial 
goals.''
    The criteria the FTC uses to determine if a remedy is acceptable 
are spelled out in case law, as well as the Bureau of Competition's 
Statement on Negotiating Merger Remedies, which states: ``an acceptable 
remedy must [. . .] maintain or restore competition in the markets 
affected by the merger.'' \6\ The Bureau of Competition's Frequently 
Asked Questions About Merger Consent Order Provisions similarly 
explains, ``Every order in a merger case has the same goal: To preserve 
fully the exiting competition in the relevant market or markets.'' \7\ 
The predictive nature of Clayton Act Section 7 enforcement requires the 
FTC to look to the facts and evidence specific to each case in 
determining whether a remedy fully maintains or restores existing 
competition in any particular matter. The overriding goal is always the 
same: As the Supreme Court has stated, restoring competition is the 
``key to the whole question of an antitrust remedy.'' \8\ These 
criteria are consistent with the commenters' recommendations.
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    \6\ Statement of the Federal Trade Commission's Bureau of 
Competition on Negotiating Merger Remedies, available at https://www.ftc.gov/tips-advice/competition-guidance/merger-remedies. See 
also Ford Motor Co. v. United States, 405 U.S. 562, 573 (1972) 
(``The relief in an antitrust case must be `effective to redress the 
violations' and `to restore competition.' . . . Complete divestiture 
is particularly appropriate where asset or stock acquisitions 
violate the antitrust laws.'').
    \7\ Federal Trade Commission, Bureau of Competition, Frequently 
Asked Questions About Merger Consent Order Provisions, available at 
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/merger-faq.
    \8\ United States v. E.I. du Pont de Nemours & Co., 366 U.S. 
316, 326 (1961).
---------------------------------------------------------------------------

    2. Expanding the study to cover more orders is unlikely to improve 
the quality of the information learned, especially when considering the 
additional burden imposed on the public.
    Studying a subset of the universe of orders that the Commission has 
issued since the last study permits the FTC to complete the study in a 
timely manner without imposing an undue burden on participants in the 
study. As proposed, this study is more comprehensive and includes more 
merger orders for study than the Commission's prior study, which itself 
yielded valuable information that led to important changes to the 
Commission's process. The Commission believes that expanding the number 
of orders studied beyond that proposed is unlikely to improve the 
quality of the information obtained or the ability to draw reliable, 
useful conclusions to a sufficient degree to warrant the added burden 
on the participants and the Commission. On the other hand, to complete 
this more comprehensive study, the Commission will rely on the 
expertise and experience of its staff, many of whom helped with the 
underlying merger investigation. This experience allows the Commission 
to limit the burden on outside parties for the orders not included in 
the interview portion of the study.
    3. The data component has been purposefully designed to minimize 
the burden on participants as much as possible while providing 
quantitative evidence that will complement and supplement the 
information obtained through the interviews.
    This study differs from the prior study primarily in its use of the 
Commission's Section 6(b) authority to issue orders to file special 
reports. The Commission anticipates sending orders to as many as 250 
participants, requesting annual unit and sales data for a seven-year 
period. These data will supplement and complement the interview 
information for assessing whether the Commission's orders achieved 
their remedial goals. The Commission believes that requesting this 
limited type of data over a seven-year time period will provide useful 
information for the study, but minimize the burden on recipients of the 
orders.

C. EPIC Comment and FTC Staff Response

    EPIC is an advocacy group that focuses on privacy issues and 
protecting consumers' privacy rights. EPIC recommends that the 
Commission review past mergers of data aggregators with a focus on non-
price factors such as data collection and the merger's impact on 
consumer privacy. EPIC identifies a series of such mergers that the 
Commission has reviewed, but for which it has imposed no conditions 
relating to privacy issues (AOL's acquisition of Time Warner), or not 
imposed conditions at all (Double Click's acquisition of Abacus, 
Google's acquisition of Double Click, and Facebook's acquisition of 
WhatsApp). EPIC recommends that the Commission study the effects of 
those mergers on privacy rights.
    Although EPIC raises very important issues, these questions go 
beyond the scope of the proposed study, which focuses on the remedies 
that the Commission has actually imposed rather than on issues or 
mergers where it determined that no remedy was warranted.

V. Request for Comment

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before July 16, 2016. 
Write ``Remedy Study, P143100'' on your comment. Your comment--
including your name and your state--will be placed on the public record 
of this proceeding, including, to the extent practicable, on the public 
Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a 
matter of discretion, the Commission tries to remove individuals' home 
contact information from comments before placing them on the Commission 
Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
. . . which is privileged or confidential,'' as provided in Section 
6(f) of the FTC Act, 15 U.S.C. Sec.  46(f), and FTC Rule 4.10(a)(2), 16 
CFR 4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you must follow the procedure explained in 
FTC Rule 4.9(c), 16 CFR

[[Page 34421]]

4.9(c).\9\ Your comment will be kept confidential only if the FTC 
General Counsel grants your request in accordance with the law and the 
public interest.
---------------------------------------------------------------------------

    \9\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/hsrdivestiturestudypra2, by following the instructions on the web-
based form. If this Notice appears at https://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``Remedy Study, P143100'' 
on your comment and on the envelope, and mail it to the following 
address: Federal Trade Commission, Office of the Secretary, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex J), Washington, DC 20580, 
or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    The FTC Act and other laws that the Commission administers permit 
the collection of public comments to consider and use in this 
proceeding as appropriate. The Commission will consider all timely and 
responsive public comments that it receives on or before July 16, 2015. 
For information on the Commission's privacy policy, including routine 
uses permitted by the Privacy Act, see https://www.ftc.gov/ftc/privacy.htm. For supporting documentation and other information 
underlying the PRA discussion in this Notice, see https://www.reginfo.gov/public/jsp/PRA/praDashboard.jsp.
    Comments on the information collection requirements subject to 
review under the PRA should additionally be submitted to OMB. If sent 
by U.S. mail, they should be addressed to Office of Information and 
Regulatory Affairs, Office of Management and Budget, Attention: Desk 
Officer for the Federal Trade Commission, New Executive Building, 
Docket Library, Room 10102, 725 17th Street NW., Washington, DC 20503. 
Comments sent to OMB by U.S. postal mail, however, are subject to 
delays due to heightened security precautions. Thus, comments instead 
should be sent by facsimile to (202) 395-5806.

Appendix

    Interviews and special orders requesting sales data

------------------------------------------------------------------------
    Date first accepted by the
            commission                Docket No.         Matter name
------------------------------------------------------------------------
1. 04/20/06.......................          C 4164  Boston Scientific
                                                     Corp/Guidant Corp.
2. 07/07/06.......................          C 4165  Hologic, Inc./
                                                     Fischer Imaging.
3. 07/18/06.......................          C 4163  Linde/BOC.
4. 08/18/06.......................          C 4173  EPCO/TEPPCO.
5. 10/03/06.......................          C 4188  The Boeing Company/
                                                     Lockheed Martin
                                                     Corp.
6. 10/17/06.......................          C 4170  Thermo Electron/
                                                     Fisher Scientific.
7. 12/28/06.......................          C 4181  General Dynamics
                                                     OTS.
8. 01/25/07.......................          C 4183  Kinder Morgan Inc.
9. 08/09/07.......................          C 4196  Jarden Corporation/
                                                     K2, Inc.
10. 09/15/07......................          C 4202  Fresenius AG/
                                                     American Renal
                                                     Association.
11. 10/09/07......................          C 4201  Kyphon, Inc./Disc-o-
                                                     tech.
12. 10/26/07......................          C 4210  Compagnie de Saint-
                                                     Gobain/Owens
                                                     Corning.
13. 04/28/08......................          C 4228  Talx Corporation.
14. 05/05/08......................          C 4219  Agrium Inc./UAP
                                                     Holding
                                                     Corporation.
15. 06/30/08......................          C 4233  Carlyle Partners/JP
                                                     Morgan.
16. 07/17/08......................          C 4224  Pernod Ricard/V&S
                                                     Spirits.
17. 07/30/08......................          C 4225  McCormick & Company/
                                                     Unilever Group.
18. 09/15/08......................          C 4236  Fresenius SE/Daiichi
                                                     Sankyo.
19 09/16/08.......................          C 4257  Reed Elsevier PLC/
                                                     ChoicePoint Inc.
20. 12/23/08......................          C 4244  Inverness Medical
                                                     Innovations, Inc./
                                                     ACON.
21. 01/23/09......................          C 4243  Dow Chemical/Rohm &
                                                     Haas.
22. 01/29/09......................          C 4251  Getinge AB/Datascope
                                                     Corp.
23. 02/26/09......................          C 4254  Lubrizol/Lockhart
                                                     Chemical.
24. 04/02/09......................          C 4253  BASF/Ciba Specialty
                                                     Chemicals.
25. 09/25/09......................          C 4273  K&S AG/Dow Chemical.
26. 11/24/09......................          C 4274  Panasonic/Sanyo.
27. 01/27/10......................          C 4283  Danaher Corp/MDS.
28. 02/26/10......................          C 4301  PepsiCo Inc./Pepsi
                                                     Bottling.
29. 05/07/10......................          D 9342  MDR (The Dunn &
                                                     Bradstreet Corp)/
                                                     QED.
30. 05/14/10......................          C 4292  Varian, Inc./
                                                     Agilent, Inc.
31. 06/30/10......................          C 4293  Pilot/Flying J.
32. 07/14/10......................          C 4297  AEA Investors/
                                                     Wilh.Werhahn.
33. 07/16/10......................          C 4300  Fidelity/
                                                     LandAmerica.
34. 07/28/10......................          C 4298  NuFarm/A.H. Marks
                                                     Holdings, Ltd.
35. 09/27/10......................          C 4305  Coca-Cola/Coca-Cola
                                                     Enterprise.
36. 10/11/10......................          C 4307  Simon Property Group/
                                                     Prime Outlets.
37. 12/29/10......................          C 4314  Keystone/Compagnie
                                                     de Saint-Gobain.
38. 05/26/11......................          C 4328  Irving/Exxon Mobil.
39. 10/28/11......................          C 4340  IMS Health/SDI
                                                     Health.
40. 12/08/11......................          C 4341  LabCorp/Orchid
                                                     Cellmark.
41. 01/11/12......................          C 4346  Amerigas/ETP.
42. 02/29/12......................          C 4349  Carpenter/HHEP-
                                                     Latrobe.
43. 03/05/12......................          C 4350  Western Digital/
                                                     Hitachi.
44. 04/26/12......................          C 4368  CoStar/Loopnet.

[[Page 34422]]

 
45. 05/01/12......................          C 4355  Kinder Morgan/El
                                                     Paso.
46. 06/11/12......................          C 4363  Johnson & Johnson/
                                                     Synthes.
47. 08/06/12......................          C 4366  Renown Health/Reno
                                                     Heart Physicians.
48. 10/12/12......................          C 4381  Magnesium Elektron.
49. 10/31/12......................          C 4380  Corning, Inc.
50. 11/15/12......................          C 4376  Hertz Global
                                                     Holdings.
51. 11/26/12......................          C 4377  Robert Bosch.
------------------------------------------------------------------------

    Questionnaires

------------------------------------------------------------------------
   Supermarkets and drug stores
------------------------------------------------------------------------
1. 06/04/07.......................          C 4191  Rite Aid/Eckerd.
2. 06/05/07.......................          D 9324  Whole Foods.
3. 11/27/07.......................          C 4209  A&P/Pathmark.
4. 08/04/10.......................          C 4295  Topps.
5. 06/15/12.......................          C 4367  Giant/Safeway.
------------------------------------------------------------------------
           Funeral homes
------------------------------------------------------------------------
6. 11/22/06.......................          C 4174  SCI/Alderwoods.
7. 11/24/09.......................          C 4275  SCI/Palm.
8. 3/25/10........................          C 4284  SCI/Keystone.
------------------------------------------------------------------------
    Hospitals and other clinics
------------------------------------------------------------------------
9. 03/30/06.......................          C 4159  Fresenius AG.
10. 10/07/09......................          D 9338  Carilion Clinic.
11. 11/25/10......................          C 4309  Universal/PSI.
12. 07/21/11......................          C 4339  Cardinal/Biotech.
13. 09/02/11......................          C 4334  Davita/DSI.
14. 02/28/12......................          C 4348  Fresenius AG.
15. 10/5/12.......................          C 4372  Universal/Ascend.
------------------------------------------------------------------------


    By direction of the Commission.
Donald S. Clark,
Secretary.

[FR Doc. 2015-14707 Filed 6-15-15; 8:45 am]
 BILLING CODE 6750-01-P