As shown in Table 2, at the end of fiscal 1968 there were only 50 Commission proceedings pending (Sec. 5, Deceptive Practices) against firms that rank among the 100 largest advertisers. These investigations involved almost one-fourth (24) of these large advertisers and accounted for merely 4 percent of the 1,400 total proceedings in deceptive practices then outstanding. The deceptive practices bureau could properly focus more resources (about five times as much as now) to cover the practices of the nation's largest advertisers. As an alternative, why not divide up the 100 top advertisers and assign them among the bureau's attorneys.

TABLE 2. PENDING PROCEEDINGS AT THE END OF FISCAL 1968 IN DECEPTIVE PRACTICES INVOLVING PROPOSED RESPONDENTS RANKED WITHIN THE NATION'S 100 LARGEST ADVERTISERS

Source: Advertising Age, Sept. 23, 1968; FTC Division of Data Processing, alphabetical listing of formal and informal matters pending June 30, 1968.

Table 3 shows the total sales and principal 4-digit S.I.C. industries of the 25 largest advertiser. The table could be used by the bureau as a planning device to determine the product lines of the top national advertisers in which to institute

new investigations. (The primary products of the entire 100 largest advertisers can be obtained from each firm's listing in Dun & Bradstreet's Million Dollar Directory, 1968.) The single largest product group represented among the 25 advertising leaders was perfumes, cosmetics, and other toilet preparations (S.I.C. Industry No. 2844) which eight of these firms produced.

TABLE 3.-ANNUAL SALES AND S.I.C. INDUSTRIES OF THE NATION'S 25 LARGEST ADVERTISERS

Source: Advertising Age, Sept. 23, 1968, for listing of top 100 advertisers; sales and S.I.C. industries of the 25 largest advertisers from Dun & Bradstreet Million Dollar Directory, 1968.

The thrust of this type of planned investigation might also focus on consumer goods industries that have a high advertising-to-sales ratio and/or experienced a substantial decline (over 25%) in the number of firms in the industry during the past decade. These target industries include cereals, cigarettes, pharmaceuticals, soft drings, beer, liquor, and detergents, among others.

CONCLUSION AND RECOMMENDATION

This paper stressed two main points that would contribute to more effective planning:

The bureaus should be advised to plan primarily by industry-centered objectives. This course could improve planning by the bureaus and allow some systematic comparison of results achieved by the divisions with the bureau goals. Using an outlined work plan, bureau heads might establish an understanding with division chiefs on a set of goals to be accomplished and on ways to judge division results.

Planning by objectives in the deceptive practices field could involve increased allocation of manpower surveillance to the principal product lines of the 100 largest national advertisers, and such a shift in resources is recommended.

MEMORANDUM

DECEMBER 24, 1968.

Subject: Recommendation for approval of proposed planning and priorities program for the Bureau of Restraint of Trade.

To: Commission.

Via: Executive Director.

From: Bureau of Restraint of Trade.

Forwarded herewith is a detailed development of the planning and priorities program for the Bureau of Restraint of Trade, outlined in the FY 1970 Budget Justification to the Bureau of the Budget.

The program represents an essential first step to further management improvement, looking to more effective planning, clarification of objectives and a streamlining of operational procedures and methods. The proposed program affects long-standing procedures and, to some extent, the prerogatives of the Bureau's enforcement divisions as well as investigations within the jurisdiction of the Bureau of Field Operations. It is not generally approved or endorsed at staff level.

Notwithstanding the principal reaction to recommended procedural innovations as "too much" by affected staff units, we are equally concerned with the possible contrary evaluation of the program as "not enough." The program seeks essentially to insure that work priorities are developed, coordinated and adjusted according to uniform procedures and pursuant to close controls. We believe this to be a sound first objective. We have considerable apprehension, however, that significantly more sweeping procedural changes at this time might affect assimilability and prove seriously disruptive. Suggestions for alternative procedures or improvements in the proposed program consistent with these objectives have not, as a general matter, been forthcoming from the affected staff units.

1

The priorities program was reviewed by the chiefs of each of the enforcement divisions of the Bureau of Restraint of Trade and by the Acting Director of the Bureau of Field Operations. Informational copies have also been supplied Mr. Berryman Davis, Legal Adviser, Bureau of Deceptive Practices, and Mr. Charles Sweeny, Commission Program Review Officer.

The most basic criticisms and objections to the proposed program by various affected staff units are in brief, as follows:

The Bureau's Division of Mergers generally approved the program 2 but indicated apprehension lest Section 7 investigations be delayed pending meetings of the Priorities Committee. It has been agreed in this regard that Section 7 investigations under the program be cleared directly with the Office of the Bureau Director, as necessary, on an ad hoc basis.

The Division of Compliance advanced a variety of objections. For example, that division complains at some length of field investigation bottlenecks, citing a number of compliance cases pending unassigned or unworked upon in the field for periods exceeding two and one-half years. The procedures which it opposes, however, are designed to insure expeditious handling of important investigations in the field with selective attrition of less important matters. The Compliance Division also argues that to make a selective alternative choice ". . . would be unfortunate if low priority matters approaching maturity or conclusion in the field were to be suspended at such juncture so as not to permit an informed resolution of the case." We are satisfied that the proposed procedures are sufficiently flexible to avoid results of the sort thus suggested.

The Division of General Trade Restraints endorsed the priorities aspect of the proposed program* but because that division has been satisfied with its liaison and coordination with the field organization, disapproves as unnecessary any formalized "superstructure" calculated to effect selective substitution of higher for lower priority matters in this field.

The Division of Discriminatory Practices registered objection to any allocation of priorities, on the theory that if preliminary screening is efficient, priorities

1 Attached as Appendix 1 to the proposed program, Memorandum to Division Chiefs dated September 24, 1968. includes comments on memorandum by Mr. Hurley, Office of Program Review, dated August 27, 1968.

2 Attached as Appendix 2 to the proposed program, Division of Mergers' comments dated October 3, 1968.

Attached as Appendix 3 to the proposed program, Division of Compliance's comments dated October 3, 1968, with responsive commentary on points raised.

'Attached as Appendix 4 to the proposed program, Division of General Trade Restraints' comments dated October 15, 1968.

are unnecessary. This division also disapproves of ". . . the meetings, the preparation of Priority Evaluation Statements and other interoffice memorandums proposed." ." The recommended preparation of a statement specifically confined to case evaluation elements to permit priority judgments with respect to recommended investigations before preparation of the detailed memorandum initating investigation, does require, unfortunately, some extra work at the outset. We believe such a procedure will provide significant man-hour savings in the long run, however.

The most emphatic objection to the Bureau of Restraint of Trade's proposed program was presented by the Bureau of Field Operations. The principal criticisms by that Bureau relate to the proposed procedure and method for selective substitution of high for low priority cases. These are opposed as (a) contravening the existing organizational structure; (b) not necessary because of the effectiveness of present Bureau of Field Operations' performance; and, (e) not practical because the field office will not be able to apply the indicated evaluation criteria unless an investigation were so near completion as to render suspension unwarranted. Of these, (c) requires special comment. It is acknowledged that currently cases are not infrequently investigated with so circumscribed a view to the acts and practices of proposed respondent, that the relationship of that respondent's practices to industry practices, the form of remedy most suitable industry-wise and the overall relative significance of matters under investigation remain unconsidered until the last stages of investigation. The alternative procedure proposed would provide the field office at the outset with an outline of the factors posited as the basis for priority designation, to be verified, amplified or corrected as a first responsibility of the investigation. Accordingly, the proposed procedure for reevaluation of cases in the field, once operative, should be practicable both as to method and investigational development sequence. It is recognized that any priorities program by this or another Bureau which seeks to maintain control over priorities, including the relative expedition of handling and the primacy of one project over another, must to some extent compromise the exclusivity of jurisdiction of the Bureau of Field Operations over matters being investigated in the field. It is believed that the proposed program permits such control with a minimum of interference with the Bureau of Field Operations' current procedures.

The Bureau of Deceptive Practices and the Bureau of Field Operations both indicated apprehension that a formal priorities plan by this Bureau would adversely affect Deceptive Practices and other non-Restraint of Trade investigations in the field. It is not our intention that field investigations initiated by other Bureaus be affected at all. It is anticipated that the investigative work of the various Bureaus will continue to be satisfactorily coordinated by the Bureau of Field Operations.

Because various references are made in the attached material to memorandums by the Executive Director and by John J. Hurley, Economist, Office of Program Review, concerning "Planning," dated respectively September 18, 1968 and August 27, 1968, copies are attached (Appendix 7).

It is recommended that the proposed planning and priorities program be approved by the Commission for implementation forthwith.

BUREAU OF RESTRAINT OF TRADE PLANNING AND PRIORITIES PROGRAM

The greatest criticism of the Bureau's over-all operation appears to be that it relies too heavily on the receipt of applications for complaint as a basis for affirmative action. With the exception of the Division of Mergers, the operation of which is essentially guided by considerations as to the comparative economie significance of particular acquisitions and mergers out of a known universe of major acquisitions, the Bureau allegedly frequently fails to adequately relate its activities to areas of indicated greatest anti-trust need. Although some violations of law within the responsibility of this Bureau manifest the kind of predatory action, competitive pressure or economic impact, that can be expected to result in applications to the Commission for corrective action, other areas of possibly greater anti-trust significance, do not. The anti-trust problems presented in the instance of high concentration industries, for example, characterized by

5 Attached as Appendix 5 to the proposed program, Division of Discriminatory Practices' comments dated November 4, 1968.

6 Attached as Appendix 6 to the proposed program, Bureau of Field Operations' comments dated October 8, 1968, with responsive commentary on points raised.

administered pricing and power to effectively control production, normally do not result in applications for complaint from the business community. An effective close-knit conspiracy, even if its existence is otherwise suspected or indicated, frequently requires some inter-conspiratorial breakdown occasioning a direct "leak," in order that the Bureau may be formally apprised as to its existence through applications for complaint. Sometimes, also, specific complaints of law violation fail to discuss overriding anti-competitive practices within an industry. The greatest current project planning need, accordingly, is in Commission initiated projects separate and distinct from projects growing out of routinely received applications for complaint.

A planning study with respect to high concentration industries was undertaken by the Bureau of Economics pursuant to Commission direction dated August 9, 1968. In addition, however, the experience and expertise residing in the Divisions should otherwise provide considerable insight into anti-trust problem areas that merit Commission attention; and, merit attention to a degree beyond that of many matters received in regular course requiring substantial manpower commitment.

At meetings of the Bureau Priorities Committee (discussed below) recommendations and suggestions as to new significant areas for economic study or investigation looking to corrective action, will be expected. Increased selectivity in initiating new matters should specifically include consideration of matters other than those prompted by applications for complaint.

SCREENING AND PRIORITY EVALUATION BY DIVISIONS INITIATING INVESTIGATIONS IN THE FIELD

The following procedures are recommended for improved selectivity in initiation of investigations in the field. They will apply primarily to the Divisions of General Trade Restraints and Discriminatory Practices. The Division of Mergers' screening procedures will continue, although recommended priorities, hereafter, will be reviewed by the Priorities Committee. Otherwise, that Division's screening operation will not be altered. The Compliance Division's investigation in the field will be subject to priority designation, but not to the screening and evaluation criteria applicable to de novo matters. The existence itself, of a Commission order, can be considered to bespeak the economic need and public interest involved in seeing to it that compliance with the terms of such order is a justified undertaking.

The Office of the Director and the Division Chiefs, at the outset, will have to designate and agree upon a tentative beginning allocation for each Division, as to the time and manpower allocation between priority and non-priority matters. Merely as a matter of a starting premise, it might be suggested that the Division of General Trade Restraints seek to establish a proportion of 40% work-commitment to priority matters with 60% on non-priority matters; Discriminatory Practices, 50% on priority matters and 50% on non-priority matters; Compliance, 75% on priority matters and 25% on non-priority matters; and Mergers, 90% on priority matters. These percentages are, of course, arbitrary figures suggested merely on the basis of apparent current operations.

Increased selectivity in screening and identification of high priority matters are closely related processes. There follows suggested procedures for use within the Divisions originating investigations, prior to consideration by the Priorities Committee.

A Priority Evaluation Statement (PES), will be prepared for each currently unassigned formal investigation in the field, and for each formal investigation in the field hereafter recommended. It will be in addition to, and not merely an incorporation within the memorandum initiating formal investigation. With respect to formal investigations hereafter recommended, the PES will be prepared prior to preparation of the memorandum to the Bureau of Field Operations requesting investigation in the field. The PES will be as short as completeness will allow but should not exceed two (2) pages in any but the most unusual circumstances.

A PES will not be prepared relative to all applications for complaint, but only as to those matters which the assigned attorney has a real and reasonable basis for conclusion that the matter warrants formal investigation, and is subject to review by the Division Chief. The Division Chief will satisfy himself both as to the responsiveness of the PES to each of the listed criteria (Appendix A)