Subpart A-Investigations

§ 2.1 How initiated.

Commission investigations and inquiries may be originated upon the request of the President, Congress, governmental agencies, or the Attorney General; upon referrals by the courts; upon complaint by members of the public; or by the Commission upon its own initiative. The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Competition and Consumer Protection, and the Regional Directors and Assistant Regional Directors of the Commission's regional offices, without power of redelegation, limited authority to initiate investigations. [35 F.R. 10584, June 30, 1970, as amended at 36 F.R. 9008, May 18, 1971]

§ 2.2 Request for Commission action.

(a) Any individual, partnership, corporation, association, or organization may request the Commission to institute an investigation in respect to any matter over which the Commission has jurisdiction.

(b) Such request should be in the form of a signed statement setting forth the alleged violation of law with such supporting information as is available, and the name and address of the person or persons complained of. No forms or formal procedures are required.

(c) The person making the request is not regarded as a party to any proceeding which might result from the investigation.

(d) It is the general Commission policy not to publish or divulge the name of an applicant or complaining party except as required by law or by the Commission's rules. Where a complaint is by a consumer or consumer representative concerning a specific consumer product or service, the Commission, in the course of a referral of the complaint or of an investigation, may disclose the identity of the complainant or complainants. In referring any such consumer complaint, the Commission specifically retains its right to take such action as it deems appropriate in the public interest and under any of the statutes which it administers.

[32 F.R. 8446, June 13, 1967, as amended at 35 F.R. 10146, June 20, 1970]

§ 2.3 Policy as to private controversies.

The Commission acts only in the public interest and does not initiate an inves

tigation or take other action when the alleged violation of law is merely a matter of private controversy and does not tend adversely to affect the public.

§ 2.4 Investigational policy.

The Commission encourages voluntary cooperation in its investigations. Where the public interest requires, however, the Commission may, in any matter under investigation, invoke any or all of the compulsory processes authorized by law. § 2.5 By whom conducted.

Inquiries and investigations are conducted under the various statutes administered by the Commission by Commission representatives designated and duly authorized for the purpose. Such representatives are "examiners" within the meaning of the Federal Trade Commission Act and are authorized to exercise and perform the duties of their office in accordance with the laws of the United States and the regulations of the Commission. Included among such duties is the administration of oaths and affirmations in any matter under investigation by the Commission.

§ 2.6 Notification of purpose.

Any person under investigation compelled or requested to furnish information or documentary evidence shall be advised with respect to the purpose and scope of the investigation.

§ 2.7 Subpoenas in investigations.

(a) The Commission or any member thereof may issue a subpoena, directing the person named therein to appear before a designated representative at a designated time and place to testify or to produce documentary evidence, or both, relating to any matter under investigation by the Commission. The Directors and Assistant Directors of the Bureaus of Competition, Consumer Protection, and Economics, and the Regional Directors and Assistant Regional Directors of the Commission's regional offices, pursuant to delegation of authority by the Commission, without power of redelegation, also may issue investigational subpoenas, and, for good cause shown, may extend the time prescribed for compliance with subpoenas issued during the investigation of any matter. The Director, Assistant Director, Regional Director, or Assistant Regional Director, who issues any subpoena under this sec

tion is authorized to negotiate and approve the terms of satisfactory compliance therewith.

(b) Any motion to limit or quash any investigational subpoena shall be filed with the Secretary of the Commission, within ten (10) days after service of the subpoena, or, if the return date is less than ten (10) days after service of the subpoena, within such other time as may be allowed. All motions to limit or quash any investigational subpoenas shall be ruled upon by the Commission itself, but the above-designated Directors, Assistant Directors, Regional Directors and Assistant Regional Directors are delegated, without power of redelegation, the authority to rule upon motions for extensions of time within which to file motions to limit or quash any investigational subpoenas. [36 F.R. 9008, May 18, 1971]

§ 2.8 Investigational hearings.

(a) Investigational hearings, as distinguished from hearings in adjudicative proceedings, may be conducted in the course of any investigation undertaken by the Commission, including rulemaking proceedings under Subpart B of Part 1 of this chapter, inquiries initiated for the purpose of determining whether or not a respondent is complying with an order of the Commission or the manner in which decrees in suits brought by the United States under the antitrust laws are being carried out, the development of facts in cases referred by the courts to the Commission as a master in chancery, and investigations made under section 5 of the Export Trade Act.

(b) Investigational hearings shall be presided over by the Commission, one or more of its members, or a duly designated representative, for the purpose of hearing the testimony of witnesses and receiving documents and other data relating to any subject under investigation; and the term "presiding official," as used in this part, means and applies to the Commission or any of its members or designated representative when so presiding. Such hearings shall be stenographically reported and a transcript thereof shall be made a part of the record of the investigation.

(c) Unless otherwise ordered by the Commission, investigational hearings shall not be public.

§ 2.9 Rights of witnesses in investigations.

(a) Any person compelled to submit data to the Commission or to testify in an investigational hearing shall be entitled to retain a copy or, on payment of lawfully prescribed costs, procure a copy of any document submitted by him and of his own testimony as stenographically reported, except that in a nonpublic hearing the witness may for good cause be limited to inspection of the official transcript of his testimony.

(b) Any witness compelled to appear in person in an investigational hearing may be accompanied, represented, and advised by counsel as follows:

(1) Counsel for a witness may advise his client, in confidence, and upon the initiative of either himself or the witness, with respect to any question asked of his client, and if the witness refuses to answer a question, then counsel may briefly state on the record if he has advised his client not to answer the question and the legal grounds for such refusal.

(2) Where it is claimed that the testimony or other evidence sought from a witness is outside the scope of the investigation, or that the witness is privileged (for reasons other than self-incrimination which may only be asserted by the witness personally) to refuse to answer a question or to produce other evidence, counsel for the witness may object on the record to the question or requirement and may state briefly and precisely the grounds therefor.

(3) Any objections made under the rules in this part will be treated as continuing objections and preserved throughout the further course of the hearing without the necessity for repeating them as to any similar line of inquiry. Cumulative objections are unnecessary. Repetition of the grounds for any objection will not be allowed.

(4) Counsel for a witness may not, for any purpose or to any extent not allowed by subparagraphs (1) and (2) of this paragraph, interrupt the examination of the witness by making any objections or statements on the record. Motions challenging the Commission's authority to conduct the investigation or the sufficiency or legality of the subpoena must have been addressed to the Commission in advance of the hearing. Copies of such motions may be filed with the presiding official as part of the record of the investigation, but no arguments in sup

port thereof will be allowed at the hearing.

(5) Following completion of the examination of a witness, counsel for the witness may on the record request the presiding official to permit the witness to clarify any of his answers which may need clarification in order that they may not be left equivocal or incomplete on the record. The granting or denial of such request shall be within the sole discretion of the presiding official.

(6) The presiding official shall take all necessary action to regulate the course to the hearing to avoid delay and to prevent or restrain disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language. Such official shall, for reasons stated on the record, immediately report to the Commission any instances where an attorney has refused to comply with his directions, or has been guilty of disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language in the course of the hearing. The Commission, acting pursuant to § 4.1(d) of this chapter, will thereupon take such further action, if any, as the circumstances warrant, including suspension or disbarment of the attorney from further practice before the Commission or exclusion from further participation in the particular investigation.

(18 U.S.C. 6002, 6004) [32 F.R. 8446, June 13, 1967, as amended at 37 F.R. 5016, Mar. 9, 1972]

$2.10 Depositions.

The Commission may order testimony to be taken by deposition in any investigation at any stage of such investigation. Such depositions may be taken before any person having power to administer oaths who may be designated by the Commission. The testimony shall be reduced to writing by the person taking the deposition, or under his direction, and shall then be subscribed by the deponent. Any person may be compelled to appear and depose and to produce documentary evidence in the same manner as witnesses may be compelled to appear and testify and produce documentary evidence as provided in §§ 2.7 through 2.9.

§ 2.11 Orders requiring access.

(a) The Commission may issue an order requiring any corporation being investigated to grant access to files for the purpose of examination and the

right to copy any documentary evidence. The Directors and Assistant Directors of the Bureaus of Competition, Consumer Protection, and Economics and the Regional Directors and Assistant Regional Directors of the Commission's regional offices, pursuant to delegation of authority by the Commission, without power of redelegation, are authorized, for good cause shown, to extend the time prescribed for compliance with orders requiring access issued during the investigation of any matter.

(b) Any motion to limit or quash an order requiring access shall be filed with the Secretary of the Commission within ten (10) days after service of the order, or, if the date for compliance is less than ten (10) days after service of the order, within such other time as may be allowed. All motions to limit or quash orders requiring access shall be ruled upon by the Commission itself, but the abovedesignated Directors, Assistant Directors, Regional Directors and Assistant Regional Directors are delegated, without power of redelegation, the authority to rule upon motions for extensions of time within which to file motions to limit or quash orders requiring access.

[36 F.R. 9008, May 18, 1971]

(a) The Commission may issue an order requiring a corporation to file a report or answers in writing to specific questions relating to any matter under investigation. The Directors and Assistant Directors of the Bureaus of Competition, Consumer Protection, and Economics, and the Regional Directors and Assistant Regional Directors of the Commission's regional offices, pursuant to delegation of authority by the Commission, without power of redelegation, are authorized, for good cause shown, to extend the time prescribed for compliance with orders requiring reports or answers to questions issued during the investigation of any matter.

(b) Any motion to limit or quash an order requiring a report or answers to specific questions shall be filed with the Secretary of the Commission within ten (10) days after service of the order, or, if the date for compliance is less than ten (10) days after service of the order, within such other time as may be allowed. All motions to limit or quash orders requiring reports or answers to questions shall be ruled upon by the Commission itself, but the above-desig

nated Directors, Assistant Directors, Regional Directors and Assistant Regional Directors are delegated, without power of redelegation, the authority to rule upon motions for extensions of time within which to file motions to limit or quash orders requiring reports or answers to questions.

[36 F.R. 9008, May 12, 1971]

§ 2.13 Noncompliance with investigational processes.

In cases of failure to comply with Commission investigational processes, appropriate action may be initiated by the Commission or the Attorney General, including actions for enforcement, forfeiture, or penalties or criminal actions. § 2.14

Disposition.

(a) When a matter is not subject to informal nonadjudicative disposition pursuant to § 2.21 and investigation indicates that corrective action is warranted, further proceedings may be instituted pursuant to the provisions of Subpart C of this part and the provisions of Part 3 of this chapter: Provided, however, That any individual, partnership, or corporation being investigated may be afforded an opportunity to submit through the operating Bureau having responsibility in the matter a proposal for disposition of the matter in the form of an executed consent order agreement complying with the requirements of § 2.33, for consideration by the Commission in connection with a proposed complaint submitted simultaneously by the Commission's staff.

(b) When the facts disclosed by an investigation indicate that corrective action is not necessary or warranted in the public interest, the investigational file will be closed. The matter may be further investigated at any time if circumstances so warrant.

(c) The Commission has delegated to the Directors and Assistant Directors of the Bureaus of Competition and Consumer Protection, without power of redelegation, limited authority to close investigations. The closing action of a Bureau Director or Assistant Bureau Director does not become effective until the files have been sent to the Secretary of the Commission and no member of the Commission has objected within five (5) working days after receiving the notice to close from the Secretary.

[32 F.R. 8446, June 13, 1967, as amended at 34 F.R. 12992, Aug. 12, 1969; 35 F.R. 10584, June 30, 1970]

§ 2.15 Orders requiring witnesses to testify or provide other information and granting immunity.

(a) Any person authorized by the Commission to issue a subpoena as specified in § 2.7 is hereby authorized to request, through the Commission's liaison officer, approval from the Attorney General for the issuance of an order requiring a witness to testify or provide other information and granting immunity under title 18, section 6002, of the United States Code. The presiding officials at investigational hearings or depositions are hereby authorized to issue such an order upon the Attorney General's approval. Approval of such order may be sought only upon determinations by the party requesting approval (1) that the testimony or other information sought from a witness or deponent, or prospective witness or deponent, may be necessary to the public interest, and (2) that such individual has refused or is likely to refuse to testify or provide other information on the basis of his privilege against selfincrimination. Such order shall be issued upon the approval of the Attorney General where it cannot be determined that a witness or deponent has improperly invoked his privilege against self-incrimination.

(b) The Commission retains the right to review the exercise of any of the functions delegated under paragraph (a) of this section. Appeals to the Commission from an order requiring a witness to testify or provide other information will be entertained by the Commission only upon a showing that a substantial question is involved, the determination of which is essential to serve the interests of justice. Such appeals shall be made on the record and shall be in the form of a brief not to exceed fifteen (15) pages in length and shall be filed within five (5) days after notice of the complained of action. Answer to any such appeal may be filed within five (5) days after service of the appeal brief. The appeal shall not operate to suspend the hearing unless otherwise ordered by the presiding official or the Commission.

(18 U.S.C. 6002, 6004) [37 F.R. 5016, Mar. 9, 1972]

Subpart B-Informal Enforcement Procedure

persons may be engaging in a practice which may involve violation of a law administered by it, and if it deems the public interest will be fully safeguarded thereby may afford such person or persons the opportunity to have a matter disposed of on an informal nonadjudicatory basis.

(b) In determining whether the public interest will be fully safeguarded through such informal administrative action, the Commission will consider: (1) The nature and gravity of the alleged violation; (2) the prior record and good faith of the parties involved; and (3) other factors, including, where appropriate, adequate assurance of voluntary compli

Within ten (10) days after service of such notice the party named in the proposed complaint may file with the Secretary of the Commission a reply stating whether or not he is interested in having the proceeding disposed of by the entry of a consent order. If the reply is in the negative or if no reply is filed within the time provided, the complaint will be issued and served forthwith. If the reply is in the affirmative, the party served will be afforded an opportunity to execute an appropriate agreement for consideration by the Commission. The party may appear personally or he may be represented by counsel who has entered an appearance under § 4.1 of this chapter. § 2.33 Agreement.

Every agreement shall contain, in addition to an appropriate order, an admission of all jurisdictional facts and express waivers of further procedural steps of the requirement that the Commission's deci

sion contain a statement of findings of fact and conclusions of law, and of all rights to seek judicial review or otherwise to challenge or contest the validity of the order. The agreement shall also contain provisions that the complaint may be used in construing the terms of the order, and that no agreement, understanding, representation, or interpretation not contained in the order or the aforementioned agreement may be used to vary or to contradict the terms of the order; that the order shall have the same force and effect and shall become final and may be altered, modified, or set aside in the same manner and within the same time provided by the statute for other orders; that the agreement shall not become a part of the official record of the proceeding unless and until it is accepted by the Commission; and that the Commission may withdraw its acceptance of the agreement if, within thirty (30) days after such acceptance, comments or views submitted to the Commission disclose facts or considerations which indicate that the order contained in the agreement is inappropriate, improper, or inadequate. In addition, the agreement may contain a statement that the signing thereof is for settlement purposes only and does not constitute an admission by any party that the law has been violated as alleged in the complaint. (18 U.S.C. 6002, 6004) [37 F.R. 5017, Mar. 9, 1972]

(a) Within thirty (30) days after the filing of an affirmative reply under § 2.32, an executed agreement conforming with the requirements of § 2.33 may be submitted to the Commission through the operating Bureau in which the matter is then pending.

(b) Upon receiving such an agreement, the Commission may: (1) Accept it; (2) reject it and issue its complaint and set the matter down for adjudication in regular course; or (3) take such other action as it may deem appropriate. If an agreement is accepted, the Commission will place the order contained therein on the public record for a period of thirty (30) days, during which it will receive and consider any comments or views concerning the order that may be filed by any interested persons. Thereafter, within thirty (30) days, the Commission may either withdraw its acceptance of the agreement and so notify the other party,