Policy Statement Regarding Duration of Competition and Consumer Protection Orders

FEDERAL TRADE COMMISSION

Policy Statement Regarding Duration of Competition and Consumer

Protection Orders

AGENCY: Federal Trade Commission.

ACTION: Notice of policy statement.

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SUMMARY: This notice describes the Federal Trade Commission's Policy

Statement regarding the duration of future and existing administrative

cease and desist orders as well as federal district court orders in

competition and consumer protection matters. Under this Policy

Statement, the Commission will ordinarily terminate (``sunset'') future

competition and consumer protection administrative orders automatically

after twenty years, unless the Commission or the Department of Justice

has filed a complaint (with or without an accompanying consent decree)

in federal court to enforce such order pursuant to Section 5(1) of the

Federal Trade Commission Act (``FTCA)''. This policy will not extend to

federal court orders. The Commission also intends to terminate each

existing administrative order twenty years after it was issued, unless

the Commission or the Department of Justice has filed a complaint (with

or without an accompanying consent decree) in federal court to enforce

such order pursuant to Section 5(1) of the FTCA during the twenty years

preceding the adoption of the Policy Statement, or unless such a

complaint is filed after the adoption of the Policy Statement and

within twenty years after the order's issuance. The Commission intends

to implement its new policy with respect to existing administrative

orders through rulemaking.

[[Page 42570]]

In adopting this Policy Statement, the Commission considered

comments filed in response to the Commission's ``Policy Statement With

Request for Public Comment Regarding Duration of Competition Orders and

Request for Public Comment Regarding Duration of Consumer Protection

Orders,'' published in the Federal Register on September 1, 1994. 59

Fed. Reg. 45286. This new Policy Statement will supersede the Policy

Statement Regarding Duration of Competition Orders adopted on July 22,

1994. In addition, the Commission is publishing and seeking comment on

a Notice of Proposed Rulemaking to implement its policy with respect to

existing administrative orders. The Commission is also soliciting

comment regarding this Policy Statement.

DATES: Comments must be received on or before September 15, 1995.

ADDRESSES: Written comments should be directed to: FTC/Office of the

Secretary, Room 159, 6th St. & Pa. Ave. N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

Donald S. Clark, Secretary, Federal Trade Commission, (202) 326-2514;

Roberta Baruch, Deputy Assistant Director for Compliance, Bureau of

Competition, (202) 326-2861; or Justin Dingfelder, Assistant Director

for Enforcement, Bureau of Consumer Protection, (202) 326-3017.

SUPPLEMENTARY INFORMATION: The Commission adopted its existing policy

regarding the duration of competition orders on July 22, 1994. Under

that policy, the Commission presumes that core provisions in future

competition administrative orders and federal court orders should

ordinarily terminate automatically after twenty years.\1\ The

Commission also presumes that all supplemental provisions in future

competition orders should sunset after no more than ten years.\2\ In

addition, in the context of petitions to reopen and vacate existing

competition administrative orders, the Commission applies a rebuttable

presumption that the public interest warrants terminating orders that

have been in force for more than twenty years. The notice announcing

this policy also requested public comment on whether consumer

protection orders also should be sunsetted.

\1\ Core provisions prohibit practices that would be unlawful

whether used by parties subject to the order at issue or by other

similarly situated persons or entities.

\2\ Supplemental provisions are intended to prevent a respondent

or defendant from repeating a law violation or to mitigate the

effects of prior illegal conduct. Such provisions either prohibit or

restrict conduct that would be lawful if engaged in by parties not

subject to the order at issue or impose an affirmative obligation

not otherwise required by law.

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The Commission received 23 comments in response to its invitation.

The commenters expressed nearly unanimous support for the Commission's

current policy of terminating competition orders. However, most of the

commenters recommended that the Commission amend the policy statement

by shortening the sunset period for new competition orders and by

terminating existing orders automatically rather than applying a

presumption in favor of termination in response to petitions to reopen.

Of the 23 commenters, 19 supported adopting a sunset policy for

both future and existing consumer protection orders, three opposed it,

and one did not address the issue. The three commenters opposing

sunsetting consumer protection orders were the FTC-Working Group of the

National Association of Attorneys General (``NAAG''), the American

Association of Retired Persons (``AARP''), and the Center for Science

in the Public Interest (``CSPI'').

The three commenters who opposed sunsetting consumer protection

orders argued that such action is unnecessary because consumer

protection orders merely require respondents to refrain from unfair or

deceptive behavior that is unlawful under any circumstances, without

respect to changes in market, organizational, or other conditions. AARP

asserted that the absence of Commission action in a particular area

does not necessarily indicate that the practices proscribed by earlier

orders in that area have ceased to be illegal. CSPI asserted that the

reopening process serves as an effective procedure for relief for

companies and individuals that find themselves subject to outdated

orders. The FTC-NAAG Working Group suggested that the requirements of

complying with Commission orders might have the potential to reduce

company costs by heightening the sensitivity of company personnel to

consumer protection law issues, thus reducing the likelihood of having

to defend against allegations regarding future violations.

The commenters who favored sunsetting consumer protection orders

advanced considerations that are essentially the same as those that the

Commission considered in deciding to sunset competition orders. In

their view, changes in legal and market circumstances over time reduce

the need to maintain orders to deter recidivism, and make continued

existence of these orders burdensome and anti-competitive. Several

commenters asserted that the enforcement options available to the

Commission for deterring violations of law have expanded significantly

over the years, making it unnecessary to rely on perpetual order

restrictions. Finally, some commenters recommended automatically

terminating consumer protection orders after ten years, while others

recommended automatically terminating them after twenty years and

applying a presumption for terminating these orders after ten years in

response to a petition to reopen.

On the basis of the comments received and other considerations, the

Commission has concluded that the existing policy regarding the

duration of competition orders should be revised in three key respects.

First, the new Policy Statement explicitly sets forth a circumstance in

which future competition orders would endure more than twenty years.

Whereas the existing policy states that core provisions in future

orders ``ordinarily'' will sunset in twenty years, the new Policy

Statement provides that core provision in future competition

administrative orders will ordinarily sunset in twenty years, unless

either the Commission or the Department of Justice has filed a

complaint (with or without an accompanying consent decree) in federal

court to enforce such order pursuant to Section 5(1) of the FTCA.\3\

\3\ The filing of such a complaint will not affect the duration

of the order if the complaint is dismissed or the court rules that

the respondent did not violate any provision of the order and the

dismissal or ruling is either upheld on appeal or not appealed.

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Second, the new Policy Statement sets forth the Commission's

intention to dispense with the petitioning process to sunset existing

competition orders and instead sunset such orders through rulemaking.

The rule, proposed elsewhere in the Federal Register, would

automatically sunset each existing administrative order twenty years

after it was issued, unless the Commission or the Department of Justice

has filed a compliant (with or without an accompanying consent decree)

in federal court to enforce such order pursuant to Section 5(1) of the

FTCA during the twenty years preceding the adoption of the Policy

Statement, or unless such a compliant is filed after the adoption of

the Policy Statement and within twenty years after the order's

issuance. Third, the new Policy Statement will not apply to Federal

court orders.

The Commission's present policy regarding the duration of consumer

[[Page 42571]]

protection administrative orders and federal court orders is that core

provisions and some type of supplemental provisions continue in effect

indefinitely and that certain other types of supplemental provisions

terminate after a specified period of time, usually five or ten years.

On the basis of comments received and other considerations, the

Commission has concluded that consumer protection administration

orders, like competition administration orders, ordinarily fulfill

their remedial purposes within twenty years. Accordingly, the

Commission will presume that core provisions and supplemental

provisions that would otherwise be perpetual in future consumer

protection administrative orders should terminate (or ``sunset'')

automatically within twenty years after the order's issuance, unless

either the Commission or the Department of Justice has filed a

compliant (with or without an accompanying consent decree) in federal

court to enforce such order pursuant to Section 5(1) of the FTCA. This

will not affect the current practice of terminating certain

supplemental provisions earlier than twenty years (e.g., provisions

requiring distribution of the order). The Commission intends to

implement its new policy with respect to existing orders through

rulemaking. The Commission's new policy with respect to future

administrative orders will be effective immediately.

However, the Commission has determined that it will not extend the

policy of sunsetting consumer protection orders to federal court orders

at this time. As discussed in the Policy Statement, many consumer

protection federal court orders (e.g., fraud orders entered under

section 13(B) of the FTCA) pose significantly different considerations

than either competition or consumer protection administrative orders.

In addition, the Commission has significantly less experience on which

to conclude that such orders serve their purpose after twenty years.

For example, most section 13(b) fraud orders first originated in the

1980s.

Statement of Policy with Respect to Duration of Competition and

Consumer Protection Orders

This statement describes the policies that the Commission has

adopted with respect to the duration of competition and consumer

protection administrative orders and federal court orders. This new

Policy Statement supersedes the Policy Statement Regarding Duration of

Competition Orders adopted on July 22, 1994.

Competition Administrative Orders

The injunctive provisions in competition administrative orders may

proscribe future violations of statutory prohibitions--and secure

adherence to statutory requirements--including the prohibition of

unfair methods of competition embodied in section 5 of the FTCA, 15

U.S.C. 45, and the prohibitions and requirements embodied in sections

2, 3, 7, 7A, and 8 of the Clayton Act, 15 U.S.C. 13, 14, 18, 18a, and

19.\4\

\4\ Competition administrative orders may include types of

relief that are not addressed in this statement because they have no

further effect once the actions they require have been taken. For

example, some orders require divestitures, revisions to bylaws, or

publication of the administrative compliant and order.

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As a matter of law, the remedial provisions of Commission orders

must bear a reasonable relationship to the unlawful practices found to

exist, and must be sufficiently clear and precise to be easily

understood by the respondents or defendants.\5\ Particular order

provisions may prohibit both the specific illegal practices alleged in

the associated complaint and ``like and related'' practices.\6\

\5\ See, e.g., FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392-

95 (1965); FTC v. National Lead Co., 352 U.S. 419, 428-30 (1957);

FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952); FTC v. Cement Inst.,

333 U.S. 683, 726 (1948); Jacob Siegel Co. v. FTC, 327 U.S. 608,

611-13 (1946).

\6\ See FTC v. Mandel Bros., Inc., 359 U.S. 385, 393 (1959);

Consumers Products of America, Inc. v. FTC, 400 F.2d 930 (3d Cir.

1968), cert. denied, 393 U.S. 1088 (1969); Nirsk Indus. v. FTC., 278

F.2d 337, 343 (7th Cir.), cert denied, 364 U.S. 883 (1960). For

example, in FTC v. Colgate-Palmolive Co., 380 U.S. 374, 395 (1965),

the Supreme Court reviewed a Commission order that prohibited a

particular advertising practice not only for the product at issue in

the case, but also for any other product. The Court sustained the

scope of the order provision, stating that

[t]he Commission is not limited to prohibiting the illegal

practice in the precise form in which it is found to have existed in

the past. Having been caught violating the Act, respondents `must

expect some fencing in.'

Id. at 395, quoting FTC v. National Lead Co., 352 U.S. at 431,

and FTC v. Ruberoid Co., 343 U.S. at 473.

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Where such a provision has been included in an order, the

Commission may prevail in a subsequent enforcement proceeding simply by

establishing that the respondent or defendant did not comply with the

terms of the provision, without having to also establish that the

conduct prohibited by the provision is illegal, or that the conduct

required is reasonably related to the prevention of illegal practices.

Future Orders

The Commission announced its current policy of sunsetting

competition orders on September 1, 1994. 59 Fed. Reg. 45,286 (1994).

Under that policy, core provisions of future competition orders are

ordinarly sunsetted at twenty years, and supplemental provisions are

sunsetted at up to 10 years.

After reviewing the comments and considering other available

information, the Commission continues to believe that core provisions

of competition administrative orders should ordinarily sunset after

twenty years and that supplemental provisions should sunset after up to

ten years.\7\ None of the comments supplied information that the

Commission had not already considered in choosing ordinarily to sunset

core provisions in competition orders after twenty years and

supplemental provisions after up to ten years. Therefore, the

Commission is not changing the sunset periods for core or supplemental

provisions in future competition orders.

\7\ Only in an exceptional case will the Commission adopt a

sunset period longer or shorter than twenty years for core

provisions. The Commission does not intend to change, in general,

the expirtation periods of particular types of supplemental

provisions that, as a matter of policy, have been set to expire by

their own terms after periods of up to ten years.

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However, the Commission has determined that the duration of future

orders should be extended in instances where a complaint has been filed

in federal court pursuant to section 5(1) of the FTCA, 15 U.S.C. 45(1),

while the order remains in force, alleging a violation of such order.

The twenty year sunset period will start anew on the date of the

complaint is filed in federal court. However, the filing of such a

complaint will not affect the duration of any supplemental order

provision that terminates before twenty years. In addition, the filing

of such a complaint will not affect the duration of the order's

application to any respondent that is not named as a defendant in such

complaint.\8\ Furthermore, the filing of

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such complaint will not affect the duration of the order if the

complaint is dismissed or if a court rules that the defendant did not

violate any provision of the order, and the dismissal or ruling is

either not appealed or upheld on appeal.

\8\ To implement this policy, new Commission administrative

orders will include a provision similar to the following:

This order will terminate twenty years from the date of its

issuance, or twenty years from the most recent date that the United

States or the Federal Trade Commission files a complaint (with or

without an accompaning consent decree) in federal court alleging any

violation of the order, whichever comes later; provided, however,

that the filing of such a complaint will not affect the duration of:

A. Any paragraph in this order that terminates in less than

twenty years;

B. This order's application to any respondent that is not named

as a defendant in such complaint; and

C. This order if such complaint is filed after the order has

terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a

federal court rules that the respondent did not violate any

provision of the order, and the dismissal or ruling is either not

appealed or upheld on appeal, then the order will terminate

according to this paragraph as though the complaint was never filed,

except that the order will not terminate between the date such

complaint is filed and the later of the deadline for appealing such

dismissal or ruling and the date such dismissal or ruling is upheld

on appeal.

A five year statute of limitations applies to civil penalty

actions filed in federal court pursuant to section 5(1) of the FTCA.

See 28 U.S.C. 2462. Therefore, it is conceivable that the government

could file a complaint up to five years after an order has

terminated challenging violations that occurred while the order was

in force. Under the Policy Statement, the filing of a complaint

after the order has terminated will not affect the duration of the

order.

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The filing of a complaint (with or without an accompanying consent

decree) under section 5(1) of the FTCA indicates that the Commission

had reason to believe the order was violated. This finding undermines

the ordinary presumption that there is no need for further order

coverage with respect to that respondent beyond twenty years.\9\

\9\ The Commission retains the discretion to change the duration

of an order pursuant to 16 CFR 2.51 or 3.72. Unless an order

modification expressly changes the duration of an order, such

modification will not affect the duration of the order as determined

by this Policy Statement. Nothing in this Policy Statement will

affect the Commission's standards for reopening and modifying or

vacating orders pursuant to 15 U.S.C. 45(b) or 16 CFR 2.51.

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Existing Orders

Under existing policy, respondents under competition administrative

orders twenty years old may have their orders sunsetted through the

order modification process, absent recidivist conduct or extraordinary

circumstances.\10\ Many commenters recommended that the Commission

modify its policy with respect to the duration of existing

administrative orders that have remained in force for twenty or more

years. They recommended that the Commission terminate such orders

automatically without engaging in a case-by-case review of each order

through the petitioning process.

\10\ The Commission states as follows in its 1994 Policy

Statement regarding the duration of competition orders:

If, however, public comments, the Commission's experience

enforcing the order, an ongoing antitrust investigation of the

petitioner or the industry in which the petitioner competes at the

Commission or the Department of Justice, or other readily available

information raised substantial concerns about whether the public

interest warrants retaining the order, such further review will be

conducted as necessary to determine whether the public interest is

best served by setting aside the order, modifying it, or retaining

it as written. The Commission anticipates that, absent extraordinary

circumstances, the basis for rebutting the presumption will be

information that the petitioner has engaged in recidivist conduct.

Id. at 45,286-87 (emphasis added).

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The Commission has concluded that these recommendations have merit.

The new Policy defines in bright-line fashion the principal

circumstances in which extended order coverage is required (the filing

of an order enforcement action). The cost of the Commission retraining

added discretion as to whether it should retain older orders, thereby

requiring a case-by-case analysis with respect to each petition, likely

exceeds the benefits of retaining older orders in extraordinary

circumstances. By adopting a policy that does not require the

Commission to exercise discretion with respect to individual orders,

the Commission will conserve scarce resources and ensure equitable

treatment of similarly situated respondents now subject to

administrative orders.

The new Policy Statement sets forth the Commission's intention to

dispense with the petitioning process to sunset existing competition

orders and instead sunset such orders through rulemaking. The proposed

rule, published elsewhere in the Federal Register, would automatically

sunset each existing administrative order twenty years after it was

issued, unless the Commission or the Department of Justice has filed a

complaint (with or without an accompanying consent decree) in federal

court to enforce such order pursuant to Section 5(1) of the FTCA during

the twenty years preceding the adoption of the Policy Statement, or

unless such a complaint is filed after the adoption of the Policy

Statement and within twenty years after the order's issuance. Under the

proposed rule, existing orders that do not terminate twenty years after

they are issued due to the filing of a section 5(1) complaint would

terminate twenty years after the filing of the most recent complaint to

enforce the order. However, the filing of such a complaint would not

affect the order's duration unless the order is in force on the date

the complaint is filed.\11\ In addition, the filing of such a complaint

will not affect the duration of the order's application to any

respondent that is not named as a defendant in the complaint. The

filing of such a complaint will only extent the duration of those order

provisions not set to expire by their own terms. For example, a

reporting requirement in an existing order that terminates ten years

after the order's issuance will not be extended by the filing of such a

complaint, even if the section 5(1) complaint is filed within that

first ten years after the order's issuance. In addition, the filing of

such a complaint will not affect the duration of the order if the

complaint is dismissed or the court rules that the respondent did not

violate any provision of the order, and the dismissal or ruling is

either not appealed or upheld on appeal.

\11\ As discussed in fn. 8, supra, a five year statute of

limitations applies to civil penalty actions filed under section

5(1) of the FTCA.

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The Commission intends to implement this policy with respect to

existing administrative orders through rulemaking rather than through

adjudication.\12\ The proposed rulemaking contemplates that respondents

will receive notice through the rulemaking process and will not receive

individual notice that their orders have been terminated. Until this

rulemaking is completed, the Commission will leave in place its current

policy regarding the duration of existing competition administrative

orders.

\12\ The Commission has the discretion to regulate parties

through issuance of a rule of general applicability as opposed to

adjudication of individual cases. SEC v. Chenery Corp., 332 U.S. 194

(1947); Heckler v. Ringer, 446 U.S. 602, 617, (1984); Nat'l Small

Shipments Traffic Conf., Inc. v. ICC, 725 F. 2d 1442, 1447 (D.C.

Cir. 1984). This is so even if the rule may effectively limit or

terminate rights or obligations in a specific case. United States v.

Storer Broadcasting Co., 351 U.S. 192, 205 (1956). An agency may

properly rely upon rulemaking to resolve certain classes of issues

that the agency might otherwise adjudicate on an individual basis.

Heckler v. Campbell, 461 U.S. 458, 467 (1982). As the court

explained:

[E]ven where an agency's enabling statute expressly requires it

to hold a hearing, the agency may rely on its rulemaking authority

to determine issues that do not require case-by-case consideration.

* * * A contrary holding would require the agency continually to

relitigate in a single rulemaking proceeding.

Id. Under the Policy Statement, the Commission does not propose

to exercise any discretion regarding the termination of existing

orders. To apply the proposed criteria for terminating existing

orders to any particular order, one need only ascertain a few facts,

all of which are easily ascertained and present no issues of fact

requiring case-by-case examination.

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Consumer protection administrative orders

Like competition orders, consumer protection orders perform several

functions. First, they may proscribe future violations of statutory

prohibitions--and secure adherence to statutory requirements--including

the prohibition of unfair and deceptive acts or practices embodied in

Section 5 of the FTCA, and the prohibitions and requirements embodied

in other statutes intended to protect consumers, such as the Fair

Credit Reporting Act, 15 U.S.C. 1681, the Truth-in-Lending Act, 15

[[Page 42573]]

U.S.C. 1601-1667, and the Wool Products Labeling Act, 15 U.S.C. 68.

Second, orders may require those subject to them to keep records,

distribute the order, or file reports with the Commission to facilitate

Commission efforts to monitor or enforce compliance with the order.

Under the Commission's existing practice, Commission order

provisions that prohibit or require particular types of conduct to

prevent ``unfair or deceptive acts or practices'' have different

durations depending on their type. Core provisions prohibit practices

that would be unlawful whether engaged in by parties subject to the

order at issue or by other similarly situated persons or entities.

Under current policy, core provisions in consumer protection orders

typically continue in force indefinitely, and a respondent bears the

burden of establishing (in the context of a petition to reopen) that

such a provision should be modified or set aside.

All other provisions in consumer protection orders may be

categorized as supplemental provisions,\13\ which are intended to

prevent a respondent or defendant from repeating a law violation or to

mitigate the effects of prior illegal conduct. Under existing policy,

some supplemental provisions in consumer protection orders terminate

automatically after different prescribed periods. For example, some

advertising disclosure, order distribution, and reporting requirements

expire in five or ten years.

\13\ The Commission may also impose or seek types of relief in

administrative orders that are not addressed in this statement

because they have no further effect once the actions they require

have been taken. For example, some orders require the payment of

redress to consumers, the payment of disgorgement to the United

States Treasury, or the dissemination of corrective advertising for

a limited time.

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Future Orders

The Commission has concluded that there also is reason to sunset

consumer protection orders. As commenters noted, many older orders

contain supplemental relief that could become over-regulatory over time

or impose requirements that the Commission would not adopt under

current practice. There also are costs to perpetual core provisions in

consumer protection orders. Basic prohibitions against misrepresenting

or failing to have substantiation still require interpretation and may

induce some companies to be more cautious than their competitions

within the range of permissible advertising practices. Over time,

changes in management or corporate culture may no longer warrant this

extra caution and result in competitive imbalances.\14\

\14\ Although it is true, as some comments point out, that

respondents subject to orders containing over-regulatory provisions

can petition the Commission to reopen and vacate such orders, the

filing of petitions entails costs for both respondents and the

Commission.

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At the same time, it can be argued that consumer protection orders

should remain in effect for a longer period than competition orders. A

principal rationale for sunsetting competition orders was that even the

core relief in such orders may become outdated or inhibit pro-

competitive conduct if, due to changes in market conditions, the

prohibited conduct no longer unreasonably restrains competition.\15\ A

number of commenters noted that consumer protection orders, by

contrast, contain core prohibitions that remain valid regardless of

marketing conditions (e.g., ``cease misrepresenting'').\16\ Although

supplemental relief in consumer protection orders may share some

attributes of supplemental relief in competition order,\17\ it often

does not share the added problem of the related core relief becoming

invalid due to changed market conditions.

\15\ This is not true of those competition orders based on per

se violations, such as price-fixing. However, a much larger

proportion of consumer protection orders are based on core concepts

that remain valid despite changes in market conditions.

\16\ See comments of NAAG, AARP, and CSPI.

\17\ Supplemental relief in consumer protection orders tends to

be more detailed in its prohibitions than core relief, and thus more

potentially burdensome. However, that is equally true of

supplemental relief in competition orders.

Thus, the Commission reasonably also could have decided that the

core and supplemental relief in consumer protection orders should

remain in effect longer than that in competition orders (e.g., thirty

years for core and twenty years for supplemental). However, the

distinctions between supplemental and core provisions in consumer

protection orders are not always clearly delineated, suggesting the

need for a uniform sunset period. For example, a provision may bar a

deceptive claim as deceptive, unless the claim is followed by a

disclosure. It could be argued that such ``triggering'' provisions have

both a core relief component to them (barring a claim as deceptive) and

a supplemental relief aspect to them (requiring a disclosure if the

claim is made). There may be disagreements over whether to characterize

such disclosures as supplemental or core relief if the policy were to

distinguish between the two, leading to anomalous results.

This resulting ambiguity regarding the characterization of

particular provisions in consumer protection orders could undermine the

clarity of Commission orders, raising respondents' cost of compliance

and negotiating settlements and Commission costs in ensuring the

enforceability of its orders. By contrast, as a general matter,

competition orders differentiate between core and fencing-in and

supplemental relief. Consequently, the Commission has determined that

it is appropriate to differentiate between consumer protection and

competition orders in this respect by ordinarily sunsetting both core

and supplemental relief in consumer protection administrative orders

after twenty years.\18\

\18\ Only in an exceptional case will the Commission adopt a

sunset period longer or shorter than twenty years for core

provisions The Commission does not intend to change, in general, the

expiration periods of particular types of supplemental provisions

that, as a matter of policy, have been set to expire by their own

terms after periods of up to ten years such as: (1) Administrative

boilerplate (e.g., recordkeeping, order distribution, and reporting

requirements); and (2) some types of disclosure requirements (e.g.,

informercial disclosures that sunset after ten years; See TV Inc.,

Docket No. C-3296 (1990)).

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Existing Orders

The Commission has determined that the new policy for terminating

existing competition administrative orders described above will also

apply to consumer protection administrative orders.\19\

\19\ The termination under the policy Statement of an order

issued in connection with a determination by the Commission that the

respondent had engaged in an unfair or deceptive practice would not

affect the ability of the Commission to recover a civil penalty

based on that determination pursuant to Section 5(m)(1)(B) of the

FTCA, 15 U.S.C. 45(n)(1)(B).

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Competition and Consumer Protection Federal Court Orders

This new policy shall not apply to either competition or consumer

protection federal court orders. The Commission has determined not to

do so for several reasons. Many consumer protection federal court

orders obtained since the early 1980s pursuant to Section 13(b) of the

FTCA address particularly egregious conduct such as hard core fraud.

Given that none of these orders have been in force for twenty years,

the Commission lacks sufficient information to determine whether their

remedial purposes will be served within twenty years.\20\ Therefore,

the Commission has determined, at least of now, not to sunset the core

provisions

[[Page 42574]]

and some supplemental provisions in these orders.

\20\ The Commission notes that it does not have the power to

unilaterally sunset federal court orders. Every federal court order

must be entered by federal court to become effective. In order to

sunset an existing federal court order, one or more parties thereto

would have to file a motion with the court seeking termination of

the order.

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In addition, many consumer protection federal court orders simply

prohibit violations of Commission trade regulation rules (e.g.,

Disclosure Requirements and Prohibitions Concerning Franchising and

Business Opportunity Ventures, 16 CFR 436) or statutes otehr than the

FTCA enforced by the Commission (e.g., Equal Credit Opportunity Act, 15

U.S.C. 1691). The core provisions in such orders are presumptively

valid beyond twenty years in that they require adherence to regulations

and statutes that are already binding on the defendants as well as

their competitors. Moreover, many of these order do not contain

supplemental provisions other than those that, as a matter of

Commission policy, normally terminate after up to ten years. Therefore,

there is no compelling reason to sunset such orders.

Finally, most competition and some consumer protection federal

court orders simply prohibit violations of Commission administrative

orders. These federal court orders will cease to have any effect once

the underlying administrative orders are terminated pursuant to this

Policy Statement. Therefore, there is no compelling reason to sunset

these federal court orders.

By direction of the Commission.

Issued: August 7, 1995

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga Concerning

Revised Statement of Policy On Duration of Commission Orders

August 1995.

The Commission today has approved a revised statement issued in

July, 1994, that applied only perspectively and did not apply to

consumer protection orders. In 1994, when the Commission issued its

statement, I wrote separately to say that the Commission should

apply a sunset policy to all its administrative orders, both

consumer protection and competition orders and existing and future

orders. I also expressed the view that the Commission need not issue

individual orders modifying or vacating existing orders but easily

could accomplish the same goal through publication of an appropriate

notice in the Federla Register. I am gratified that today's

statement is fully consistent with myv laws of a year ago and now, I

am pleased to join the Commission in its current decision.

[FR Doc. 95-20144 Filed 8-15-95; 8:45 am]

BILLING CODE 6750-01-M