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To these ends, the Commission will emphasize:

Maintaining and expanding prosecution of prirate
restraints on competition.
Re-examining the costs and benefits of existing
or proposed government regulation and taking
appropriate action against wasteful and anti-
competitive practices at all levels of government.
Making full use of the new powers conferred by
the Magnuson-Moss Warranty Federal Trade Commission
Improvement Act of 1974 to eliminate unfair and
deceptive trade practices.

Combined with the Commission's planning, resource allocation, and programmatic control processes, these initiatives provide the basic thrust for the Commission's fiscal 1977 activities. Now, we would like to give you an overview of each of our missions and to highlight several specific programs.

MAINTAINING COMPETITION MISSION

The major emphasis of the Maintaining Competition Mission will continue to be in the areas of food, energy, and health care. It is anticipated that these programs will consume nearly 46 percent of the resource request for the fiscal 1977 budget for the Commission's antitrust activities.

In fiscal 1977, pretrial activity in the Exxon, et al. litigation will include discovery and analysis of millions of document pages subpoenaed from respondents and third parties by Commission trial counsel. Most of the increase in funds to be allocated to the Exxon proceeding is directly related to the personnel, travel, and support expenses associated with this required field discovery.

In addition, work in the Engery Program includes activity on reports, mandated by the Congress, on the structure, practices and performance of significant energy industries.

In the past year, three staff reports have been published; the Western States Petroleum Industry, Federal Energy Land Policy, and Mineral Leasing on Indian Lands. Currently scheduled for publication in the near future are additional reports on the coal, nuclear, and solar energy industries, and on the competitive effects of the use of fuel adjustment clauses by utilities. The need to seek enforcement of the

Commission's compulsory process against a number of corporations in the energy and financial industries is likely to delay completion of the other energy industries reports until

fiscal 1977.

In addition, the Commission is examining possible enforcement activities involving the energy industries, as well as performing its responsibilities under a number of special statutes pertaining to the energy industries, including the Energy Policy and Conservation Act of 1975.

In fiscal 1977, the Commission plans to increase the resources devoted to its inquiry into competition at the various stages of food production and distribution. At the grower-producer level, the Commission staff issued a report regarding the Capper-Volstead Act antitrust exemption for certain activities of agricultural cooperatives. This subject will continue to be an area of concern for further Commission study and possible law enforcement initiatives.

In the manufacturer-processor area of the food industries many cases are in litigation, including the cereal case (Rellogg, et al.), which is now beginning trial. In addition, other major litigation in this area includes pretrial activity involving the Commission's complaint alleging monopolization and discriminatory and predatory

practices by ITT-Continental Baking Company and the Commission's complaint challenging the acquisition by Nestle Alimentana S.A. of Stouffer Corporation.

In the distribution and marketing segments of the program, the Commission will continue surveillance of the marketing practices of food wholesalers and distributors, including alleged violations of Section 5 of the Federal Trade Commission Act and of the Robinson-Patman Act. The Commission will also continue to pursue its investigation of retail food pricing. Finally, the food program also includes an analysis of the soybean and grain industries to determine whether there are any possible anti-competitive practices that may be corrected by possible antitrust prosecution.

Planned resources to be committed to a revised Health Care Program are more than doubled from the fiscal 1976 level to the fiscal 1977 request. This program has been revised to concentrate on the three major components of the health care field: drugs, hospital care, and physician services. In this connection, the Commission has recently issued a complaint alleging that the code of ethics of the American Medical Association illegally restrains advertising and competitive practices by doctors. The Commission has also announced an industrywide investigation involving the practices of Blue Shield, which, together with Blue Cross, is the leader in health care insurance.

In fiscal 1977, the Commission will continue to devote substantial resources to its law enforcement activities involving mergers, horizontal and distributional restraints. Law enforcement activity in the merger area is expected to increase as the economy improves and stock prices increase. In addition, increased efforts will be placed on the identification and investigation of horizontal or price fixing restraints and other forms of collusion, including problems involving government procurement. Resources for the Commission's continued vigilance against illegal distributional restraints, including discriminatory practices, are included

in both its distributional restraints program, and in specific

law enforcement activity in the Food and other programs.

For fiscal 1977, the Commission's ability to continue

prosecution of its existing antitrust workload, while under

taking new initiatives will depend on the availability of

sufficient resources.

For the Maintaining Competition

Mission, we request increases of 30 positions and $5,515,000

for a total request of $23,147,000 and 639 permanent positions.

of the $5.5 million increase, $3.7 will be devoted to the

Exxon litigation.

CONSUMER PROTECTION MISSION

Fiscal year 1977 will see continued Commission action

to enable consumers to protect themselves through fair and

honest disclosure of information necessary to make an informed

choice among competing products, to prevent unfair or deceptive

trade practices, and to provide redress to consumers who

have been injured as a result of illegal practices.

As a result of the passage of the Magnuson-Moss Warranty

Federal Trade Commission Improvement Act of 1974, the

Commission has a significantly strengthened ability to protect

consumers by eliminating unfair or deceptive practices.

During fiscal 1976, the Commission redesigned a major part

of its Consumer Protection Mission to take advantage of the

Act's potential for more cost-effective law enforcement.

[blocks in formation]

The promulgation of trade regulation rules provides

the Commission with a systematic approach to a broad spectrum

of unfair or deceptive practices in a number of significant

industries.

As mandated by the Congress, the Commission

has already proposed four warranty rules, three of which

are final, designed to promote competition among warrantors

and establish standards for the fair and non-deceptive use

of warranties.

During this fiscal year, the Commission has

also issued trade regulation rules to protect mail order

buyers and to preserve consumers' defenses in credit trans

actions that previously were blocked by the holder in due

course doctrine.

Additional rulemaking proceedings are

currently underway in the areas of food nutrition advertising,

credit practices, the funeral industry, vocational schools,

hearing aids, and the used car sales.

In total, the Commission

has 17 rules currently under consideration, and is encouraging

wide public participation in these proceedings to build the

best possible record for promulgation of final rules.

Exhibit

1, attached, indicates the status and development of trade

[blocks in formation]

which may have an anti-competitive impact on consumer access

to goods and services.

It is noteworthy that such "preemption"

would not impose a new layer of federal law upon existing

law.

Instead, restrictive private and state restraints would

be neutralized, thus strengthening the operation of the free

market.

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