each affected Division will recommend priority designations for each such matter."

Priorities as to these matters will be determined through the Priorities Committee in the same manner as with initial recommendations for field investigation.

2. With respect to pending seven-digit investigations within the Divisions, or field investigations whose priority classification can be shown to be directly related to significant matters currently pending within the Divisions, the following procedures, if and when approved, will apply.

Merger Division: Division of Mergers' investigations currently pending may all be considered as "priority" investigations for purposes of initial correlation of Bureau priorities. Designated degrees of priority for such investigations, however, will assist in setting up evaluation relationships as regards the work of the other Divisions and will provide a useful beginning point for subsequent priority determinations. Accordingly, the Division of Mergers will classify each of its pending investigations successively in order to importance, by industry, supplying, in addition, a brief statement as to the Section 7 significance of each industry in accordance with the Merger Screening Criteria, a copy of which is attached as Appendix C.

Other Divisions: The Division of General Trade Restraints, Discriminatory Practices and Compliance will review their files so as to enable each such Division to identify each pending investigation in the field which, in their judgment, warrants a classification of "first" or "second" priority, because of specific Commission directive, the relationship of such investigation to a pending Division project of major significance, or other over-riding consideration. Any such pending investigational matter, if the Priorities Committee assents to "first" or "second" priority designation, will be removed from the category of matters directly subject to suspension. Each such matter will be identified in a report to the Priorities Committee with a brief statement explaining the basis for each recommended priority classification.

MATTERS NOT SUBJECT TO PRIORITY PROCEDURES

Routine Divisional work assignments, assistance in preparation of advisory opinions, non-case duties, special projects, etc., together with informal and "Small Business" inquiries, remain among the matters not subject to the proposed formal priority assignment procedures. Of course, conduct of such workassignments will be according to practical priorities, applied according to the best judgment of each Division Chief, and will be handled in a sufficiently flexible manner as to accommodate the demands of matters of designated priority, in the case of conflict.

CORRELATION WITH BUREAU OF FIELD OPERATIONS

In the instance of all priority assignments (i.e., other than “Routine”) the Director of Field Operations will forward a copy of the PES to each Field Office so located as to be able to accommodate the investigation, advising them as to the approximate manpower commitment involved. Each Field Office so served will promptly review with its assigned Field Office attorney, all matters currently under investigation, previously initiated by the Division initiating the pending priority investigation. The Attorney in Charge of each such Field Office will thereupon directly advise the Director, Bureau of Field Operations by telephone as to their recommendation, based on the investigational data secured to date, for suspension of a matter, or matters, to accommodate the priority assignment. The Director, Bureau of Field Operations will tentatively select a matter. or matters, for suspension on the basis of the Field Office recommendations, and notify the Office of the Director, Bureau of Restraint of Trade and the originating Division, as to his recommendation for suspension. If the Chief of the originating Division does not concur as to the recommended suspension, he must elect another matter theretofore initiated by his Division, for suspension. In the possible eventuality that the Bureau of Field Operations and the originating Division jointly recommend to the Office of the Director, Bureau of Restraint of

It is not contemplated that the files of such cases need be returned from the Field Offices for this purpose, but merely that the Divisions involved draft Priority Evaluation Statements from their own records, for submission to the Priorities Committee.

It is contemplated that this will involve a minimum of three most proximate Field Offices, but in no event will be restricted to one.

Trade, that no matter initiated by that Division justifies suspension to accommodate the new priority investigation, in the public interest, the Bureau of Field Operations may, on the basis of investigational developments, propose a matter, or matters, initiated by another Division, for suspension. After appropriate review and conference with the Chief of such other Division, a formal determination as to suspension will be made by the Office of the Director, Bureau of Restraint of Trade.

The Director of Field Operations will promptly notify the Field Office, or Offices, with respect to any investigations formally designated for suspension, and will appropriately forward the initiating memorandum and files of the priority investigation.

Each Field Office with a matter formally designated for suspension, will prepare a Suspension Memorandum, noting the fact of suspension and the basis therefor; covering therein each of the criteria elements listed in the attached Appendix B. Suspension memoranda should be complete but brief, and should not exceed 5 pages. Copies of the Suspension Memorandum will be forwarded to (1) The Director, Bureau of Field Operations; (2) the Office of the Director, Bureau of Restraint of Trade; (3) the Division initiating the new priority investigation; and (4) the Division whose matter was suspended, if a different Division.

Suspended matters will be re-activated as soon as the superseding priority investigation is completed. Matters twice suspended to permit investigation of higher priority matters will be returned to the originating Division for re-evaluation, closing or such other disposition as may be warranted.

Priorities based upon Priority Evaluation Statements may be given a different priority at any time that circumstances warrant. Recommendations for priority changes may originate from any Office within the Bureau of Field Operations or the Director of that Bureau, or from the initiating Division of the Bureau of Restraint of Trade. Concurrence of the Office of the Director, Bureau of Restraint of Trade, must be secured. Differences between Bureaus as to priorities or suspensions which cannot be resolved, if such should occur, will be submitted to the Commission Program Officer for resolution.

A recommended change in priority will be supported by a memorandum covering each of the criteria elements applicable to a Suspension Memorandum (see attached Appendix B).

Continuous appraisal and re-evaluation of the projects and work commitments in Restraint of Trade matters, will require the specific obligation at all work levels, in both the Bureau of Restraint of Trade and the Bureau of Field Operations, to work and think in terms of work-project effectiveness and for inter-bureau coordination of effort to that end. The principal responsibilities of the Bureau of Field Operations will be to ascertain, secure and develop the facts supporting priority evaluations as to each investigation in the field, in terms of the nature, extent and duration of practices under inquiry, their competitive effects and the economic significance or impact of their continuation, together with the probability of establishing a basis for and the indicated best means for, effective corrective action by the Commission.

The affected Divisions of the Bureau of Restraint of Trade are to see to it that they are kept currently advised on all developments in the field on priority matters. Divisional attorneys, assigned priority matters, for example, are responsible for ascertainment that all desired avenues of investigation are being pursued; and that all needed coverage is made, while the investigation is still in the field.

Means, other than case-by-case litigation, for securing effective corrective action, should be considered and evaluated, if such means are presented, or as they may be revealed or suggested during the course of the investigation.

Close cooperation in utilization of compulsory processes, the securing of assistance from the Division of Accounting or from other Bureaus of the Commission are responsibilities of the Divisional attorney, when and if, during the course of the priority investigation, such need should arise.

APPENDIX A

CRITERIA ELEMENTS

1. The substantiality of the unlawful acts or practices alleged (i.e., the nature of the alleged law violation or violations; to extensiveness of alleged occurrence; the geographic area or areas involved; the indicated number of markets or businesses affected; the reported period of practice duration; etc.);

36-138-70—vol. 3—53

2. The relevance of the market structure involved (i.e., the significance of the acts or practices alleged in the light of the number, nature, size or market positions of those reportedly involved, including the alleged law violator, or violators, and the customers or competitors affected; the existence of vertically integrated participants; the existence of oligopoly or significant market control by any participating or affected parties; etc.); and

3. The significance of the industry or of the commodity involved, or, alternatively, the significance of the economic or social environment in which the alleged violation occurs (i.e., an evaluation of the indicated impact of the alleged act or practice noting the greater social-economic significance, for example, of a conspiracy to fix the price of fluid milk, than would normally apply with respect to a conspiracy to fix the price of home photographic film; the indicated urgency for corrective action as a result of particularly critical economic or marketing conditions, etc.).

APPENDIX B

CRITERIA ELEMENTS

1. The substantiality of the unlawful acts or practices alleged;

2. The relevance of market structure;

3. The significance of the industry or of the commodity involved, or, alternatively, the significance of the economic or social environment in which the alleged violation occurs;

4. The indicated probability that corrective action can be sustained, on the basis of jurisdictional facts already adduced, or on the merits;

5. Ameloriating economic or competitive developments subsequent to initiation of investigations; and

6. Time and manpower involvement out of proportion to the merit of other factors considered.

APPENDIX C

CRITERIA USED IN SELECTING MERGER DIVISION CASES FOR INVESTIGATION

A careful but flexible selection procedure is followed in choosing those acquisitions and mergers which will be investigated in depth. Broadly speaking, the preliminary screening process involves analyzing mergers and acquisitions in the context of the industry or industries involved, the structure of the industry and the competitive consequences reasonably likely to result from the merger or acquisition. The specific criteria used include:

1. Market Share. How large is the acquisition sales-wise? What shares of the market are being combined?

2. Concentration. What is the concentration ratio of the industry? Is concentration likely to be increased or deconcentration prevented as a result of the merger?

3. Product Markets. Is the merger occurring in an industry which directly affects consumers such as food, housing and apparel? A high priority is given to mergers in these industries. Also, is a basic industry involved such as steel. petroleum, chemicals or textiles where a significant merger may cause adverse competitive repercussions in related industries?

4. Geographic Market. Preference is given to those mergers and acquisitions involving the broadest geographic market.

5. Per se Violations. Where it appears that a per se violation of Section 7 is involved, initiation of an investigation is mandatory in carrying out the Commission's enforcement responsibility.

6. Developing the Law. An effort is made to select mergers and acquisitions which will test and develop new theories of merger enforcement, some of which have been successfully developed in the past or which may require further testing. These include use of reciprocal power, elimination of potential entry, increasing barriers to entry, and utilization of financial dominance or the “deep pocket" as well as newer untested and untried economic principles.

7. Enforcement Policy Statements. The Commission issues merger enforcement policy statements for particular industries from time to time. This Division is obligated to be prepared to institute investigations in implementation of these policy statements.

The foregoing are the general criteria used in the selectivity process. Depending on the particular circumstances of the merger or acquisition involved, cer tain of these criteria may be more significant in some cases than in others. A concerted effort is made to use all these criteria to the fullest extent possible in charting the course of investigations and in utilizing the funds and professional manpower allocated to this Division.

821

FEDERAL TRADE COMMISSION

COMMISSION MINUTES OF JULY 21, 1969

Special matter: Proposed Budget Requests for Fiscal Year 1971

The Commission, in company with the Comptroller, considered the proposed budget requests for fiscal 1971, as submitted by the Chairman with special matter circulation of July 8, 1969.

Mr. Dixon moved that the Bureau of Restraint of Trade by allocated an additional 67 professional and 31 clerical personnel. Mr. MacIntyre seconded the motion. The motion was lost for want of a majority.

On substitute motion of Miss Jones as amended by Mr. Nicholson, the Commission approved the allocation of 37 professional and 16 supporting clerical positions to the Bureau of Restraint of Trade, with the understanding that allocations to specific positions would be considered after the staff budget justification submission.

Commissioners Dixon and MacIntyre voted in the affirmative as to the foregoing action, but would have preferred the Chairman's motion. Mr. Elman voted in the affirmative only for the reason that it would prevent the request from being increased.

Chairman Dixon moved that the Bureau of Deceptive Practices be allocated an additional 88 professional and 44 clerical personnel. The motion lost for want of a second.

On substitute motion of Mr. Nicholson, the Commission approved the allocation of an additional 75 professional and 36 clerical personnel, without specific allocation to Divisions.

Mr. Elman voted in the negative as to the foregoing action.

On motion of Mr. Nixon, the Bureau of Field Operations was allocated an additional 100 professional and 35 clerical personnel. As to the foregoing action, Mr. Elman voted in the negative and Mr. Nicholson reserved his vote.

On motion of Miss Jones, as amended by Mr. Nicholson, it was directed that three disparate field offices be given investigational authority to operate without instructions from headquarters in investigating cases to see how it works, that another three field offices be given like authority but confining themselves to deceptive practices cases. This should be pursued as a pilot study for six months and a report of the results, including the effect on morale and output, be made to the Commission thereafter. The selected field offices were authorized to deal directly with the operating bureau insofar as discussing investigational procedure. As to the foregoing action, Mr. Dixon voted in the negative and Mr. MacIntyre abstained. The motion carried.

On motion of Mr. Nicholson, the Commission approved the allocation of two additional professional personnel each to the Divisions of Industry Guides and Trade Regulation Rules in the Bureau of Industry Guidance, and two clerical positions.

Mr. Elman voted in the negative as to the foregoing action.

During discussion, Mr. Elman moved that the Bureau of Industry Guidance be abolished. The motion was lost for want of a second.

As a substitute motion by Miss Jones, the Office of Program Review was directed to submit a report to the Commission by September 1, 1969, of programs and techniques by which the Bureau of Industry Guidance's basic function might be accomplished in lieu of its present exclusive concern with drafting and administering guides, rules and advisory opinions.

Mr. Nicholson seconded the above motion and Mr. Elman voted in the affirmative. Commissioners Dixon and MacIntyre voted in the negative for the reason that it would be more orderly to undertake such action after a new Chairman has been designated.

On motion of Mr. Dixon, the Bureau of Economics was allocated an additional 40 professional and 22 clerical personnel for Fiscal 1971.

Chairman Dixon moved that the Bureau of Textiles and Furs be allocated in additional 28 professional and 10 clerical personnel. The motion lost for want of a second.

As a substitute motion, Mr. MacIntyre moved that the professional staff, includng inspectors, be increased to 40 with the understanding that the major part of that increase is to be allocated to the enforcement of the Flammable Fabrics tet, as amended December 14, 1967, plus supporting personnel. The motion lost 'or want of a second.

Mr. MacIntyre then seconded the motion made by Mr. Dixon. The motion was lost for want of a majority.

All motions respecting personnel for the Bureau of Textiles and Furs having failed, there was no increase in the allocation of personnel to this Bureau.

For the minute record, Mr. Nicholson stated that in Fiscal 1970 there was a substantial increase in the Bureau of Textiles and Furs for enforcement of Rule 36 under the Rules and Regulations of the Wool Products Labeling Act and for enforcement of the new Flammable Fabrics Act, and it was his opinion that in view of the holding with respect to Rule 36 the Bureau had adequate personnel to enforce the laws with which it is charged.

On motion of Mr. Elman, the Bureau of Textiles and Furs was instructed that with respect to the funds appropriated for Fiscal 1970, the Bureau give the highest priority to enforcement of the Flammable Fabrics Act and that it make whatever administrative and personnel changes necessary in order to ensure that the Flammable Fabrics Act is effectively administered in the public interest. On motion of Miss Jones, the Bureau was further instructed to report to the Commission by September 1, 1969 on the advantages and disadvantages of ap pointing a special individual charged solely with the responsibility of supervis ing the enforcement of the Flammable Fabrics Act.

Mr. MacIntyre moved that the Commission, as a matter of policy, make clear in its instructions to the staff that they no longer submit assurances of voluntary compliance in the matter of violations of the Flammable Fabrics Act, but at the least secure proposals for cease and desist orders. The motion was lost for want of a second.

On motion of Mr. Dixon, the Commission approved the allocation of an additional six professional and three clerical positions to the Office of the General Counsel.

Subject to further consideration by the Chairman, the increases in allocation of personnel for the Offices of the Secretary, Program Review, Administration and Comptroller, as submitted in the proposed budget request for Fiscal 1971, were approved.

The Commission's budget request for Fiscal 1971, as submitted by the Chairman with the changes noted above, was approved.

Commissioner Elman requested that his position be shown on the minutes and in the request to the Bureau of Budget as follows: "Commissioner Elman does not support an increase in the Commission's budget so long as it remains under present management. In his view, the manifest failures and deficiencies in the Commission's performance would not be removed by increasing its appro priation; indeed, they would only be magnified. Doubling the Commission's budget, in itself, would only double the Commission's problems. More money, in itself, would mean more waste, more inefficiency, more aimlessness, more delays. more dissipation of resources on relatively insignificant matters, more jobs (especially in the higher pay brackets) filled by incompetent personnel. A fundamentally restructured, and reorganized Commission could use all the funds now appropriated, and more; but a substantial increase in the budget should not precede but follow, and be part of, the necessary and long overdue process of reconstruction."

After further discussion, Mr. Nicholson moved that each of the Commissioners designate one person from his/her office to operate as a committee on behalf of the Commission until September 1, 1969, and to prepare a report then on all pending matters in all Bureaus and Divisions as to what the cases are, what do they provide, how old are they, and with recommendations for closing, continuing, etc. The motion lost for want of a second.

On substitute motion of Mr. Elman, the Directors of the Bureaus of Deceptive Practices and Restraint of Trade were instructed to submit a report to the Conmission by September 1, 1969 which lists every seven digit file matter which is more than one year old in the case of Deceptive Practices and more than 18 months old in the case of Restraint of Trade, and in each of these matters submit a recommendation for its disposition, or if unable to make such recommendation, to make an explanation as to why a recommenation cannot be made for its disposition. They were further instructed to submit a report on the number of seven digit cases in each Bureau that are less than one year or 18 months old, respectively.

As to the foregoing action, Commissioners Jones and Nicholson voted in the affirmative, Mr. Dixon voted in the affirmative with the understanding that this action is going to take considerable time and the Commission partly shares the responsibility for the use of that time, and Mr. MacIntyre reserved his vote.