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HD2775 1975 C. 2 Annual Report of the FEDERAL TRADE COMMISSION 1975 HD2775
1975
C. 2
Annual Report of the
FEDERAL TRADE
COMMISSION
1975 Annual
Report
of the
FEDERAL
TRADE
COMMISSION
For the Fiscal Year Ended
June 30, 1975
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington D.C. 20402. Price 80 cents (Paper Cover)
Stock No. 018-000-00190-0/Catalog No. PT 1.1:975
There is a minimum charge of $1.00 for each mail order FEDERAL TRADE COMMISSION
(As of June 30, 1975)
LEWIS A. ENGMAN, Chairman
PAUL RAND DIXON, Commissioner
MAYO J. THOMPSON, Commissioner
M. ELIZABETH HANFORD, Commissioner
STEPHEN A. NYE, Commissioner
CHARLES A. TOBIN, Secretary
R. T. McNAMAR, Executive Director
ROBERT J. LEWIS, General Counsel
DANIEL H. HANSCOM, Chief, Administrative Law Judges
J. THOMAS ROSCH, Director, Bureau of Consumer Protection
F. M. SCHERER, Director, Bureau of Economics
ROBERT E. LIEDQUIST, Acting Director, Bureau of Competition
WESLEY J. LIEBELER, Director, Office of Policy Planning and Evaluation
ARTHUR L. AMOLSCH, Director, Office of Public Information EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION
Pennsylvania Avenue at Sixth St., N.W.
Washington, D.C. 20580
Regional Offices
Atlanta, Ga.
Room 800
730 Peachtree Street, N.E.
Zip Code: 30308
Boston, Mass.
Room 200-C
John F. Kennedy Federal Building
Government Center
Zip Code: 02203
Chicago, Ill.
Suite 1437
55 East Monroe Street
Zip Code: 60603
Cleveland, Ohio
Room 1339
Federal Office Building
1240 East 9th Street
Zip Code: 44199
Dallas, Texas
Room 452-B
500 South Ervay Street
Zip Code: 75201
Kansas City, Mo.
Room 2806
Federal Office Building
911 Walnut Street
Zip Code: 64106
Los Angeles, Calif.
Room 13209
Federal Building
11000 Wilshire Boulevard
Zip Code: 90024
New Orleans, La.
Room 1000
Masonic Temple Bldg.
333 St. Charles Street
Zip Code: 70130
New York, N. Y.
Room 2243-BB
Federal Building
26 Federal Plaza
Zip Code: 10007
San Francisco, Calif.
Box 36005
450 Golden Gate Avenue
Zip Code: 94102
Seattle, Wash.
Suite 908
Republic Bldg.
1511 Third Avenue
Zip Code: 98101
Washington, D. C
Room 600-C
Gelman Building
2120 L Street, N.W.
Zip Code: 20037
iii Field Stations
Charlotte, N. C.
Room 206
623 East Trade Street
Zip Code: 28202
Miami, Fla.
Room 105
995 N.W. 119th Street
Zip Code: 33168
Oak Ridge, Tenn.
Room 209
Federal Office Building
P. O. Box 568
Zip Code: 37830
San Antonio, Texas
San Antonio Federal Ctr. Building 3 Street
630 Main Avenue
Zip Code: 78212
Denver, Colo.
Room 1006
Federal Office Building
1961 Stout Street
Zip Code: 80202
Honolulu, Hawaii
Room 605
Melim Bldg.
333 Queen Street
Zip Code: 98613
Philadelphia, Pa.
Room 9202
William J. Green Jr.
Federal Office Building
600 Arch Street
Zip Code: 19106
iv Letter of Transmittal
FEDERAL TRADE COMMISSION
Washington, D.C.
To the Congress of the United States:
It is a pleasure to transmit the sixty-first Annual Report of the Federal Trade Commission covering
its accomplishments during the fiscal year ended June 30, 1975.
By direction of the Commission.
CALVIN J. COLLIER,
Chairman.
THE PRESIDENT OF THE SENATE
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES
v TABLE OF CONTENTS
Chapter
Page
I.
The Year In Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II.
Maintaining Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III.
Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
IV.
Economic Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
V.
Executive Direction and Policy Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
VI.
Administration and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
VII.
Funds Available to the Commission During
Fiscal Year 1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
vii Chapter I
THE YEAR IN SUMMARY
With its fiscal 1975 budget, the Commission began making resource allocation decisions on a
programmatic basis. It took steps to introduce cost/benefit analysis into resource planning decisions and
embarked on a management improvement program designed to complement and support the program budget.
As part of the process, the Commission used its Office of Policy Planning and Evaluation to assess the
effectiveness of programs and to recommend resource allocations based on potential yield of benefits to
consumers. The Commission also initiated a formal, semi-annual review of staff progress in each individual
program so that changes in program emphasis could be made pursuant to shifting priorities.
One result of the program review was a dramatic increase in the percentage of resources devoted to
eliminating barriers to competition. This increased emphasis reflects the Commission's belief that restraints
upon competition deprive the public of access to goods and services of optimum quality at minimum prices
and that a free and honest market is the best guarantor of consumer benefit. Particular attention was given
to the areas of energy, food, and health care.
The passage of the Magnuson-Moss Warranty - Federal Trade Commission Act of 1975 substantially
strengthened the Commission's ability to deal with consumer problems by confirming the Commission's
authority to issue substantive trade regulation rules and empowering the Commission to seek consumer
redress and civil penalties for rule violations. Under the warranty provisions of Magnuson-Moss, the
Commission is developing a system of warranty regulation designed to promote competition among
warrantors and establish standards for the fair and nondeceptive use of warranties. To this end, seven
proposed trade regulation rules were
1 issued by the Commission. In addition, during this year, the Commission also began designing a program
to codify into trade regulation rules the definitions of unfair or deceptive conduct previously developed in
individual case litigation, its industry guides, and trade regulation rules.
FISCAL YEAR 1975 PROGRAM ACCOMPLISHMENTS
Major program accomplishments for the Commission for fiscal year 1975 are discussed by mission as
follows: MAINTAINING COMPETITION CONSUMER PROTECTION ECONOMIC ACTIVITIES EXECUTIVE DIRECTION AND POLICY PLANNING ADMINISTRATION AND MANAGEMENT
2 Chapter II
MAINTAINING COMPETITION
The Commission made substantial progress during fiscal 1975 in developing major antitrust cases in
support of the Maintaining Competition mission. The Xerox patent monopoly case (office copier industry)
was withdrawn from adjudication for purposes of settlement. Both the Exxon, et al. case (petroleum industry
litigation) and Kellogg, et al. ("Breakfast Cereal" case) advanced through pretrial stages. The Commission
issued a new complaint charging alleged monopolization of the airport auto rental market by the nation's
leading car leasing firms (Avis-Hertz-National). Investigations with far-reaching economic and consumer
significance were undertaken, especially in the food and health care sectors, and merger law enforcement
activity continued to be highly trial-intensive.
Direct enforcement effort in Maintaining Competition was characterized by three broad emphases:
extensive investigative activity in cases having a major economic impact such as the food and health care
industries; intensive trial activity; and, continued legal-economic activity encompassing the full scope of the
energy industries.
The investigation and litigation activities in this mission were augmented by continued management
improvements. Utilization of the program planning concept was further implemented; case evaluation and
selection processes were refined and employed effectively; and steps were taken to improve coordination of
efforts. Moreover, increasing use was made of the Bureau of Economics in analyzing cost/benefit
considerations for proposed enforcement and investigative actions.
3 In fiscal 1975, the Commission issued 31 complaints and 28 final orders in the competition area, as
compared with 28 complaints and 26 final orders in fiscal 1974. The litigation workload included 49 matters
in adjudication at year-end. In addition, compliance efforts in fiscal 1975 resulted in 18 divestitures under
seven different Commission orders. Through prosecution of civil penalty actions for failure to comply with
Commission orders, over $4 million in penalties were assessed or affirmed.
As a result of careful review of all pending investigations under comprehensive evaluation procedures,
a number of unpromising files were closed, reducing the total of open formal antitrust investigations to less
than 130.
The discussion following covers (1) a survey of accomplishments in each enforcement program in the
Maintaining Competition mission, (2) a review of contributions made to the mission by regional offices and
the General Counsel, and