people must be assigned. The Division's work under this program divides into two rather well-defined tasks. The first task is that of handling the day-to-day administrative work. Professional competence is needed here because many, if not most, of the queries from firms concern technical problems, such as SIC classification, definitions of sales, revenues, etc. The second task involves the preparation of summaries and analyses from the data received. Here, professional competence is a requirement, since the data must be analyzed, summarized and presented in a manner that will maximize its usefulness, both for economic studies and for enforcement use. With the planned consolidation of the cement and food distribution merger reporting programs into the Pre-merger Notification project, the necessity for additional personnel becomes urgent. But our preliminary experience with the Pre-merger Notification project is patently inadequate as a basis for forecasting man power needs for 1971. As yet, we have had no experience with refusals or defaults. We have not yet been able to correlate our work of listing mergers from published sources with the Pre-merger project, so as to spot incipient defaults. Nor have we had the time or personnel to prepare individual reports, showing market shares, entries and exits, etc., that could be used for case work. To achieve optimum value from the Pre-merger Notification program, the Division needs a permanent group to assure efficient summary and analysis of data received so that those data may be readily available in useable form to the Divisions of Mergers, and of General Trade Restraints in the Bureau of Restraint of Trade, as well as to the Division of Industry Analysis in the Bureau of Economics. Additionally, the program must be so administered and the records it generates so kept that the General Counsel's staff can have a sufficient basis for preparing for default proceedings, which surely will arise. Inadequate handling of the Premerger Notification project in its infancy can vitiate its usefulness. It should also be emphasized that the marked rise in large mergers of the conglomerate type in recent years requires sophisticated probing and analysis by the staff of the Division of Economic Evidence, particularly since the recent turn in enforcement activity requires an alert staff of well trained economists, well versed in the theory of competition, which can formulate techniques through which meaningful and pragmatic analysis may provide important links between growing aggregate concentration brought about by conglomerate mergers and the structure, conduct and performance in particular markets. This is especially crucial where mergers involve the amalgamation of firms with leading positions in highly concentrated industries. The Division's staff, already the smallest in the Bureau, and much smaller than that of the Division of Mergers, should be enlarged if conglomerate mergers are to be adequately analyzed. We, therefore, request at least four additional professional staff members for more extensive Section 7 analytical work and the programing of the Pre-merger Notification program. ADDITIONAL PERSONNEL FOR FISCAL 1971 The Division in fiscal 1969 had 26 full-time employees and one part-time. Of the full-time employees 18 are professionals and 8 clerical. For fiscal year 1970 the same number of employees, namely 27, were allocated to the Division. As indicated above, our request is that 4 new professional employees be added to our allocation for fiscal year 1971 in view of the increasing responsibilities, particularly in connection with the pre-notification program, bringing the total professional employees in the Division to 22 which, added to the 8 clerical employees, would bring the total to 30. In addition, one part-time employee would be on the staff. DIVISION OF FINANCIAL STATISTICS One of the important missions of this Division is to make available to the Commission and to the public more and better statistical information about the structure of American industrial corporations. A significant step toward achieving this mission would be to centralize in the Division of Financial Statistics the reporting program now divided between FTC and SEC. This is the Division's request for fiscal 1971. There are 87 multi-billion-dollar manufacturing corporations, according to the most recent FTC-SEC quarterly report. These 87 own nearly half of the total assets of all corporate manufacturers. Of the 569 firms which now own nearly three-fourths of all corporate manufacturing assets, 524 report to SEC and 45 to FTC. While FTC obtains each quarter information as to the ownership, sales, product mix, profitability, and the like of all large privately-owned manufacturing corporations, it does not have similar data for large publicly-owned firms. Approximately 8,300 firms now report to FTC in the FTC-SEC quarterly financial reporting program. If the 2,541 firms which report to SEC were to report instead to FTC, economic information not heretofore available to FTC could be developed for use on a continuing basis. Such centralization, which would be extremely valuable to the Commission in improving investigational planning and deploying its resources, can be accomplished at a cost not exceeding 20 man years. Because of the need for this information and the very high rate of return of essential data at relatively low cost, this project should be given high priority, both in the Bureau's and Commission's budgets for fiscal 1971. MEMORANDUM FEDERAL TRADE COMMISSION, Subject: Appropriations request for fiscal year 1971. In re: Preliminary ideas and plans of the bureaus and offices. To: The Commission. From: Paul Rand Dixon, Chairman. I recently distributed to the Commissioners the preliminary plans of the staff for the 1971 Appropriation request. The Commission by Minute of May 13, 1969, directed that meetings with the staff be scheduled for the latter part of June in order to discuss this matter. It would be of great benefit to the staff in preparing for such meetings if the Commissioners would review the staff proposals and submit within the near future their views on such proposals so that the staff would have a reasonable time before the discussions to study the various views and could be responsive thereto at the time of the discussions. We operate under strict time limitations fixed by the Bureau of the Budget in submitting to the Bureau our budget requests. I would hope that after the above discussions with the staff the Commission would then give the staff definite instructions for the preparation of the final draft of the budget request. For your information, there is attached hereto a copy of my memorandum of March 20, 1969, requesting the preliminary plans from the bureaus for the 1971 budget. PAUL RAND DIXON, Chairman. MEMORANDUM FEDERAL TRADE COMMISSION, Subject: Your ideas and basic plans for the fiscal 1971 budget. March 20, 1969. Improved investigational planning can help the Commission deal with trade regulation problems ahead of time, and it can place in better perspective the principal issues involved in how we deploy our resources. In some past years, however, the Commission has not had enough time allowed in the budget process to fully weigh the staff budget requests. In the main these staff justifications have been submitted to the Commission close to the deadline for forwarding the total Commission budget to the Budget Bureau. To remedy this situation and to allow the Commissioners more time to size up your upcoming budget proposals, you are requested to prepare forthwith a basic planning document for your bureau (or office) covering the major investigations and other significant projects that you plan to undertake and justify in your budget request for fiscal 1971. Please hand in your program memorandum to me, via the Executive Director, by April 25, 1969, and try to keep the length of these documents down to around ten pages. I want to stress that your statement should focus primarily on what you are going to do-limited by divisions to your six to ten most important projects— rather than on personnel requests. The Commission will appraise your investigational plans and make some decisions with respect to your proposed projects, and then you can proceed to detail and formalize your budget presentation and staff needs. Investigational planning is not necessarily an attempt to improve operating efficiency, because doing the same old things more efficiently overlooks the point that more important things could be done. Your response memorandum should concentrate on the question that follows: What should you be doing that you are not doing? On this issue projected into fiscal 1971, you are asked to consider these questions: (1) Are there any significantly monopolistic, anti-competitive, consumer deceptive or noncompetitive practices, structures or other phenomena which have not been but should be challenged? (2) Identify such phenomena, analyze them economically and legally, and indicate in what industries they are present and to what extent or degree. If you do not know the answer or complete answer to the question as to prevalence and degree, in what industries, analytically and by inference, are they likely to be found? (3) What is necessary by way of interpretation of existing law to successfully challenge such phenomena? We are aware that some of our resources will have to be used to investigate matters reported by outside complaints during fiscal 1971, or to probe huge mergers that occur during that period which we cannot now predict. Nevertheless. there is still considerable room for you to plan some important investigations that far ahead on your own initiative. Investigational planning does not mean processing and rearranging complaint letters for staff attention. I will give you a few examples of investigational planning of resource uses for budgeting purposes independent of outside complaints. In the trade restraints area, the staff could scan the industry landscape of the economy to identify major industries whose structure and performance predispose them to price fixing or price discrimination or other illegal practices. Compliance investigations of significant orders could be planned in important product lines. In the deceptive practices field, heavy advertising outlays for various consumer-oriented products by large national advertisers provide some clues for planned investigations. Consideration should be given to ways and means for identifying problem areas. The program memorandum that you present should take into account the foregoing planning guide lines and cover the following ground: (1) Each bureau, division, and office should assume initially that it will have the same funds for fiscal 1971 as it has for the instant fiscal year. The program memorandum should provide a list and brief defense of each major project to be (a) continued and (b) started during fiscal 1971. In addition, projects should be included and so identified which would be added if a 20% increase were allowed in the budget for the bureau. These projects should be arranged in the program memorandum on an industry basis and in order of priority, along with a brief note on the nature of the problems, the objectives of the project, its estimated dollar and manpower costs and the target date of completion. To afford the Commission more choice in deciding on its resource commitments, for each major project proposed the staff program memorandum should provide a similar brief statement on the next best alternative. (2) The Bureau Director should consolidate and evaluate the division proposals. This mechanism as outlined could provide the Commission with a timely and more rational basis for planning its annual program. There would be presented on a priority basis the major planned projects and their costs as well as the results of increases or decreases in budget funds. PAUL RAND DIXON, Chairman. MEMORANDUM Subject: Ideas and plans of the bureaus and offices for fiscal 1971. From: Executive Director. APRIL 30, 1969. Your March 20, 1969 directive instructed the bureau directors and office heads to inform you via my office of the major projects they intend to start or continue during fiscal 1971. I now have their replies which are attached herewith. I am also attaching a memorandum concerning these plans that I requested from the Office of Program Review. I have examined the staff program memoranda and recommend their early presentation to the Commission. The staff plans can provide the Commission with a basis for shaping the direction and dimensions of our fiscal 1971 budget request. The Commission deliberations on these tentative staff plans can produce a useful set of Commission instructions that the staff would carry out to strengthen their formal budget proposals. Subject: Program evaluation of plans and projects proposed by the bureaus and offices for fiscal 1971 To: Executive Director. From: Office of Program Review. Pursuant to your verbal request of April 29, 1969, and in line with the program review function, this report comments on the plans and projects presented by the bureaus and offices in reply to the Chairman's March 20, 1969 instruction. The staff program memoranda are returned to you herewith along with a copy of my April 3, 1969 policy planning memorandum. The essence of planning is to see opportunities and threats in the future and exploit or combat them as the case may be. Planning is choosing among alternative proposals for committing limited resources. The foundations of an organizational planning effort are the basic purposes of the organization, the specific objectives to be sought and planning studies of the economic environment. To focus on primary objectives, the Commission needs initially to settle on a program structure. An adequate program structure, as outlined on the next page, must serve a dual purpose. It must be meaningful in terms of national goals; it must also function as a basis for the efficiency of Commission operations. To serve this dual purpose, it follows that a hierarchical program structure is required. Major programs must be identified with national goals and then broken down into significant sub-programs. At the bottom of the program structure pyramid, subprograms may be analysed in terms of dollars costs and some quantifiable results. The further up this pyramid one goes, the more difficult any precise quantification of outputs becomes. A PROGRAM STRUCTURE OF THE FEDERAL TRADE COMMISSION I. Maintaining competition A. Prevention of Unlawful Mergers B. Prevention of General Trade Restraints C. Prevention of Unlawful Price Discrimination II. Consumer protection A. Prevention of Deceptive Practices B. Prevention of the Sale of Flammable Fabrics and Misbranding of Textile, Wool and Fur Products C. Fostering Business Self-regulation through the Issuance of Rules, Guides and Advisory Opinions III. Economic research and program development A. Economic Fact-Finding Studies of Industries and Competitive Conditions B. Continuing reporting program on Manufacturing Industries |