Early, Empirical, Essential: Engaging The FTC’s BCP And BE On Economic Analysis In Consumer Protection Investigations

FTC Bureau of Consumer Protection (BCP) Director Chris Mufarrige recently penned a blog post entitled "How to Best Engage with BCP and BE on Economic Analysis in BCP Investigations." This post is the most recent example of the consistent message that BCP has been sending for months and that we documented in October: The Bureau of Economics (BE) is placing increased importance in consumer protection investigations.

Specifically, the blog post emphasizes that “early and substantive engagement” with the BE in cases in which the FTC is seeking monetary relief is integral to a company’s effective response to an FTC Civil Investigative Demand (CID). Director Mufarrige’s post also indicates that BCP and BE staff will endeavor to be as transparent as possible about potential theories of economic harm, providing high-level summaries of how staff is evaluating harm and calculating proposed civil penalties. These summaries are meant to include general descriptions of the empirical analyses conducted by BE staff during the investigation and how they support the proposed complaint. 

For outside counsel, Director Mufarrige lays out expectations for businesses that wish to “maximize the productivity of discussions about the economic analysis of harm.” Essentially, BCP leadership expects businesses to signal the involvement of outside experts in advance, present empirical evidence as early as possible, and provide any written summaries of said analysis early enough to give agency staff time to analyze them, along with underlying data and code. The director essentially reserves the right to ignore any economic analysis that is not produced in accordance with these guidelines, saying “BE is less likely to expend its resources engaging with you about presentations that provide only a summary of your analysis without the underlying data, methodology, and econometrics. Similarly, if there is insufficient time for BE and BCP staff to analyze what you provide, it will be impossible to incorporate your analysis into my recommendations to the Commission.” 

The post concludes with something like a quid pro quo regarding transparency, suggesting BCP and BE staff will engage with businesses and their consultants (i.e., provide detailed information on theories of harm and support analyses) in proportion to how cooperative and transparent the business is being.

The clear message is that companies with CIDs that indicate a likelihood of a demand for monetary relief are best served by engaging the assistance of outside economic consultants as early as possible. BCP has now repeatedly signaled the importance of its own internal economic analysis on its evaluation of liability and injury in consumer protection cases. As a result, the CIDs for such cases feature data-intensive demands developed in consultation with the BE. As antitrust practitioners handling HSR second requests have long been aware, and as the BE lays out in its own guidance on economic best practices, coordinating a response to such demands is greatly aided by economic experts with the capability to ingest and process large quantities of data, while simultaneously analyzing the data to preview any potential patterns the FTC’s economists might uncover.

The institutional reality of BCP investigations—including staffing and timing—has typically afforded BE staff months (if not years) of full-time work to dig into the CID response from the company. This period includes responding to ad hoc data analysis requests from BCP attorneys as they develop their cases and conducting an independent analysis of any data available in order to establish materiality and quantify injury. Engaging with outside experts early allows the business to direct some of that analysis by suggesting, through its own experts’ analysis, what it deems to be important. It also allows the business to establish an empirical record with which BE economists must contend. Finally, early engagement helps avoid a scenario in which outside experts are scrambling to provide credible and robust analysis in the final stages of an investigation to address what BE economists have been developing over the course of months or more. 

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