FTC Announces Expansion of Compulsory Process Resolutions to Eight Areas

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On September 14, 2021, the Federal Trade Commission (“FTC”) voted 3-2 to approve new compulsory process resolutions in eight areas.

Compulsory process refers to the issuance of demands for documents and testimony, through the use of civil investigative demands and subpoenas. The FTC Act authorizes the FTC to use compulsory process in its investigations, which requires the recipient to produce information, and these orders are enforceable by courts.

According to the press release, the “resolutions announced today will broaden the ability for FTC investigators and prosecutors to obtain evidence in critical investigations on key areas where the FTC’s work can make the most impact. Each omnibus covers investigations into competition or consumer protection conduct violations under the FTC Act.” 

The eight areas for which compulsory process resolutions are authorized are:

  • Service members and Veterans: harmful business practices directed at service members and veterans.
  • Children under 18: harmful conduct directed at children under 18.
  • Algorithmic and Biometric Bias: allegations of bias in algorithms and biometrics.
  • Deceptive and Manipulative Conduct on the Internet: this omnibus expands a previous omnibus resolution on deceptive practices, which expired on August 1. The existing resolution has enabled the FTC to develop investigations and bring cases in a variety of areas including day trading services, tech support scams, the BOTS Act, payment processing, and the deceptive marketing of goods and services online, including pandemic-related goods like fake Clorox products and face masks. In addition to the areas covered by the existing resolution, this expanded version covers the “manipulation of user interfaces,” including but not limited to dark patterns, also the subject of a recent FTC workshop
  • Repair Restrictions: enhances the FTC’s ongoing investigations into restrictions on repair and builds on the FTC’s recent Policy Statement on Right to Repair. It would cover a wide range of anti-consumer and anti-competitive abuses and facilitate staff’s impending investigation of violations of the Magnuson Moss Warranty Act’s anti-tying provisions.
  • Abuse of Intellectual Property: allows staff to investigate abuses of intellectual property rights. Conduct involving abuse of intellectual property rights has been a source of much anticompetitive and deceptive conduct in many different areas, including pharmaceuticals, technology and gasoline refining, and this omnibus will allow staff to expeditiously investigate allegations in this area. 
  • Common Director and Officers and Common Ownership: facilitates investigations of both ownership stakes in competing companies that may be anticompetitive, as well as interlocking directorates that may violate Section 8 of the Clayton Act, 15 U.S.C. § 19. Interlocking directorates and common ownership continue to raise significant competitive concerns.
  • Monopolistic Practices: Market power abuses by tech companies and other large companies are rightly a source of bipartisan concern. This omnibus will allow staff to more expeditiously investigate market power abuses by dominant firms that are precluding businesses and entrepreneurs from being able to compete, particularly in digital markets.  

The two dissenting Commissioners lambasted the majority’s use of omnibus motions and claimed that authorizing compulsory investigations would be harmful by creating less accountability to the FTC. The dissenting statement claims: “removing Commission oversight of investigations does virtually nothing to make those investigations more effective but does mean less input and oversight from the Commission. These resolutions create less accountability and more room for mistakes, overreach, cost overruns and even politically-motivated decision making.”

The majority commissioners’ statement defended the use of omnibus resolutions and claimed: “[o]mnibus resolutions remove bureaucratic hurdles that slow down the agency staff’s ability to expeditiously move matters along. Given the agency’s severe resource constraints, finding ways to make our processes more efficient and streamlined is paramount.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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