Tuesday, December 23, 2008

FTC Amends Rules for Administrative Trials

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Federal Trade Commission issued interim final rules on December 23, 2008, amending Parts 3 and 4 of its Rules of Practice. The amended rules are intended to expedite the Part 3 process for administrative trials. The agency said that it is responding to criticism that the agency's adjudicatory process is too protracted.

Tighter Time Limits

The amended rules set tighter time limits during the adjudicatory process leading up to the issuance of an administrative law judge’s initial decision. For example, evidentiary hearings will generally be five months from the date of the complaint in most merger cases and eight months from the date of the complaint in non-merger cases, and the time to answer a complaint will be shortened from 20 to 14 days.

In addition, the amendments would change discovery and motions practice, expedite evidentiary hearings, and change the Commission’s process for handling motions to dismiss or to withdraw a case from administrative adjudication after a federal court’s denial of a preliminary injunction in an action brought by the Commission.

Commission Deadlines

The Commission also announced for the first time tight deadlines for its resolution of appeals. The amendments set deadlines for when the Commission must rule on dispositive motions, applications for interlocutory appeals, and motions to dismiss after the denial of a preliminary injunction. The Commission added a requirement that it rule on motions to dismiss or for withdrawal from adjudication not later than 30 days after the filing of motion papers.

Notice of Proposed Rulemaking

The amendments follow an October 7, 2008, Notice of Proposed Rulemaking (NPRM), in which the Commission invited public comment on proposed amendments. “The proposed amendments announced in the October 7, 2008, NPRM were the culmination of a recent broad and systematic internal review to improve the Commission’s Part 3 practices and procedures in light of recent adjudicatory experiences,” according to the Commission.

The public comment period closed on November 6, 2008. The Commission received eight comments.

Commission Response to Public Comments

The Commission responded to comments criticizing the rule changes. It rejected arguments that the timing deadlines are unfair, noting that “the government’s monopoly case against Microsoft and its merger case against Oracle, have gone to trial on roughly similar schedules.” Moreover, the Commission noted that the provisions authorize the extension of deadlines for “good cause.”

Commenters’ concerns about the role of the Commission in deciding legal and policy issues early in the proceeding were not compelling. According to the Commission, the commenters failed to demonstrate that early Commission involvement improperly interferes with the independence of the administrative law judge.

Prospective Application

The amendments will apply prospectively only to new cases initiated after publication in the Federal Register, which is anticipated shortly. Current rules will govern all currently pending Commission adjudicatory proceedings.

Request for Comment

The agency will accept public comments on the rules comments within 30 days of the date they are published in the Federal Register. The Commission is especially interested in comments on amendments that were not proposed in the NPRM.

Comments should refer to "Parts 3 and 4 Rules of Practice Rulemaking --P072104" and should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex R), 600 Pennsylvania Avenue, NW, Washington, DC 20580.

Comments may also be filed in electronic form here.

A news release and the text of the Federal Register Notice appear on the FTC website.

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