jurisdiction as i have indicated to madam chairman, with a new cfpb. that is a fact of the matter. no additional spendsing by this egs a is justified in these hard times and under these hard circumstance s in my judgment. >> if i could just responds. sure. >> you know, in our -- as you pointsed out, our budget actually less for this year, than for fy 2013 than we are using in fy 2012. we have a light increase in the operating budget, i think it's $1.5 million, for ftes and the rest of it is for technology upgrades of which are really very much needed and again, you determine our appropriation, we

understand that. wherever we end up we will do our best and we are a pretty efficient agency in terms of getting bang for your buck. but, i do think that if we end up particularly if we end up sequestration or with a reduction, we will not be able to do the things you want us to do. that mean s bringing cases or slower bringing of cases and reviewing do you wants of businesses. when we are doing a merger review, it's the business s that can put us on the clock and we have to review, you know, tremendous numbers of documents in a second request, which it is where we are closely skrut nicing the deal -- skrut -- scutinizing the deal. we have to look at on average, 1.5 million documents. so, you know, again, we will work within the budget that the congress and the suggeb committ gives us but we are a productive agency and so, we are just, so i

understand commissioner rush, i ha have great respect for him. if you want us to be as effective as we have been, and there's consensus that we have been effective, it will be tough to do it with a smaller budget. >> it's clear on both side aisl effective and take on new areas with that in minds, the last question that i had added to my binder. see, it's not even in the binder, even though it has holes in it is one that this committee knows i care a lot about and it's the equal treatment or the lack thereof by a lot of folks who sell their goods in the territories. so for instance, in puerto rico,

the consumer affairs sued amazon, because they will not ship or give the special shipping rates to the territories, in this case, the virgin islands, that they do to the 50 states and my argument, very briefly for those who may forget it, if you live under the american flag, you should be treat eed equally. what can you do, what can happen, now that everyone seems to be aware that it's happening more and more? i'll give you an example, there was a journalist interviewing the commissioner in puerto rico and found out she had a problem with her car and needed a part and she went on line to get that part and she was told it could be not delivered to puerto rico. the suggestion was that ship it's to a relative and then have them ship it to you.

that is not an answer for oppose people that are american citizens, in closing before you responds, when i ask these question s at the committee, i look at the congressman womack because i know he had a long military career, when it comes to veterans, we treat everyone equally, and yet, when they go back home, they do not get the same services or treatment because they have lived in a territory and not a state. what is under your jurisdiction that you can do about the problem? >> we will take a look at this issue, i know a little bit about it. we can go after companies that gauge in unfair acts or prices. or practices, or unfair methods of competition. >> it may not be deceptive, it's lacking. >> as i understand amazon's practice, you can get free shipping in the 48 contiguous states but maybe not hawaii and alaska and puerto rico, they are

saying they are not giving it's to you. is it unfair is the next question. unfairness may be determined about whether there's an increased cost to them. and, but i'll say this. we have brought anti-trust cases and done anti-trust investigations in puerto rico, it's done some sometimes out of our headquarters and our new york office and i believe we had matser -- matters where there were entrenched company s with high market shares trying to prevent competitors from coming into the marketplace. i'll get back to you on both things. >> thank you. thank you madam chair. >> thank you, mr. alexander, before you talk, for those of

you that the did not come in, i said that we will take people in order of senior ity -- order of seniority, but if you came in late, it's first come first serve, so you came in last. >> if i promise not to go long, i can make a opening statement? >> sure. >> in your opening comment you said you feel like in all of your dealings you continue to hit above your waist, but it's hitting below the waist of the other guy that hurts and they are the ones that we have to stands up for. just to comment. as you know, there's much concern among the community and senior about the effects of the possible merger of two of the nation's largest pbms. the concern s include the effects that the merger would

have on rural pharmacies and the patient access to those pharmacies of their choice. as a member representing a very rural district, i share these concerns, so commissioner eer iw that you cannot comment on this, but we hope that the views of the rural pharmacists are being adequately considered as you move forward with the practice. and the question is, we are hearing some reports that the ftc will recommend in its forthcoming privacy report a government imposed regime data collection, and that could starve the economy for the information that it needs. have you done any sort of

economic analysis before making such a dramatic recommendation? >> let me take the second question first, which is with we have not finished up our final privacy reports and our privacy -- so, i do not want to comment on what we will do. it is circulating around though. it is largely about best practices. in other words, and we -- more privacy by design, more choice for consumer s, and more transparency. very few people read privacy notices online, it's not about enforcement efforts or regulation, we see ourselves as as an enforcement agency in the privacy area and i know we all have concerns about privacy, it's about the enforcement cases that benefit brought for than 100 social security cases. i hear your concerns there and we are not going to -- and i

don't want to say exactly what we will do, but we will not be regulating, we are not a regulatory agency in that sense. on esi medco, we are looking at it and asking question s and collecting information and we are very aware of the sort of rural independent pharmacists, my mother-in-law was a pharmacist, and i have met with a number of groups on both i'ds -- on both sides of the issue. >> i can only say or reiterate that my grand father was a pharmacist as well. so, there. >> okay, to privacy issue, do you have evidence to show or to demonstrate that the public is being harmed now if we do not do anything? >> you know, certainly in the

case s we have brought like when someone gets or puts spyware in your computer, that is a harm to the public, even if it's hard to quantify that harm. when you talk about some of the oth other cases involving facebook or google and they said they will protect people's information and make it private and then made the default public. it's hard to quantify the harms. as i view our privacy report or our policy work and we have had a policy function going back to when the agency was created almost 100 years ago, it's about approximate best practices, and so in a lot of companies, a lot of companies are -- want to be engaged in best practice s and we work with the stakeholders so, for example, one company that participated in the work shops of was walmart. because they believe it's important to have good privacy practices, it encourages more

trust in the internet and more commerce. but i hear your points we do not wants to be a regulatory agency here. >> i'm comforted to hear the congressman say that, perhaps that does away with my concerns with the privacy report that was issued the december of 2010. as i read the report and again, it was a draft at that point, it appeared that the emphasis was on unfairness, and we told the congress, back in 1980 and we reiterated in 1982, that we were going to reign in on unfairness. as opposed to the deception prong, we were going to vigorously protect consumers under the deception prong. and that is what i think we ought to do. and beyond that, we have championed as i read the report,

i thought that the staff had championed a do not track recommendation and i thought we were in no position to advise anybody let alone the congress of all people, about what we out to do about do not track. i mean, after all, the solutions that have been offered, through both the -- both the browse er solution s and self regulatory solutions, we are not ready for prime time in my judgment. and for that reason, i disagreed with the privacy report as it was written at that tyime. >> i'm actually supportive of the notion of do not track. if a consumer wants to opt out of tracking, not advertisements,

he or she out to be able to do that when i started and tom first got to the agency, we had a republican chairman and said your computer is your property. we have supported a do not track option. it's been supported by a number of companies. there's coming with a digital advertisement alliance, and there are a hundred company s, that are trying to come up with -- that have in fact come up with a little icon that you can click on to opt out of advertising, and it's beginning to work, having said that it's not a regulatory idea, it's an idea that, again, is about best practices. >> thank you, madam chair. >> mr. womack. >> thank you for your time today, just a couple of

questions and i'll have some to submit for the record. kind of a follow-up to line of questioning of mr. alexander. what similarity or differences between the cvs,caremark merger can you identify for the sub committee? >> cvs -- caremark, we approved the merger in 2006, i want to say. somewhere around there, it was one pharmacy and one pbm, exscript s and medco, two pbms and then we went back we had

complaints about whether cvs was violating terms of the consent, with we went back and looked at the practices and did an investigation and found that they were in violation, they had put consumers into the doughnut hole by miscalculating the amounts that they owed to seniors earlier than they should, so we got complete redress for those consumer s effected. coming back to your question, one was a merger of a pbm, and a retailer circumstantially, and this is a merger of proposed merger of two pbms. >> as is -- >> they are horizon competitors in other words. >> as has been mentioned because i have a military background, the tri-care program is important to me. mr. chairman, should the ftc approve the merger, do you believe the new company's control other 30% of the retail drug market, 60% of the total

mail order market will benefit the next round of bidding or will it deattract from the ability to provide affordable prescription access to military families? >> i do not want to rep -- i don't want to prejudge an answer on this. my staff is working on the military aspects, i had not thought of this until now, why don't we get back to you consistent with what we can say at this time in the investigation. i would say, that under the statute, the clayton act, if an agreement may substantially lessles lessen competition in a line of commerce, we have to challenge it. so if it does, we will challenge it. if it is doesn't, we won't.

we will get back to you on that. >> commissioner, any thoughts? >> the only thought i have congressman womack is the last thing that we want to do is mandate and require an open network, that would be, again, the federal government intruding into an area where it really should have no purchase at all in terms of what it does with respect to prices or terms of sale of these products. that is the only thing i woued what the -- thing i woulded ede add to what the chairman has said. >> there's not a person on the panel is that not gets questions a home about what can be done about the ever increasing price of gasoline and transportation

fuel and i was reading through your testimony and it said, november of '90 the market manipulation rule was final. what thought s do you have or what direction are you taking regarding anti-competitive or man ip or manipula manipulateive practices going on. people say to me all the time atity home, consensus of opinion is that there's manipulation going on. and so, where are we? >> look of course we are obviously aware of how the increasing price of gas hurts middle class particularly. it means that people have less money to buy necessity, and we have -- we have an open investigation, we with found

anomalies among refinery s, there are profits were going up and we looked to see if there was an anti-trust violation or manipulation going on on. having said that, time and time again, he wi -- time and time again, opec is the largest factor. opec is a criminal price fixing violation, they set output. if it was done by companies rather than by nation s, and so, it's a -- you know, we have brought cases to block oil company cmanagerers and -- company mergers and were insi insisting on divestiture. i know you hear about it when

you go back to -- back home, i hear about it from my neighbors and from you know, every time i go fill up at the bump. we are working on it and we will they go back to the pump. >> i do have a few about this and i disagree with the chairman of the this particular matter, our bureau of economics has open pointed that he said that it's a worldwide market and that there are very few things that we can do about it as the ftc with respect to supply and demand. that said, the question is, for me, at least, whether the president can do something about it, besides simply appoint a task force which the ftc is a member, to investigate price manipulators. and i would say yes, for three reasons.

first of all, i think that if the forces of supply and demand do control this market and it's a worldwide market, then anything that can be done with respect to domestic exploration including the president's determination that there should be more of it, will immediately be reflected in the behavior of price traders throughout the world. secondly, i think that the idea of postponing a decision on the keystone pipeline, which would import canadian oil and gas from canada, is not justified on any other grounds than that it is political. and i say that as someone who has a small farm along with my wife in the ogalala aquafur.

it's been nothing but a charade to design or let the public know or at least think that we're doing something about it. i don't think we're doing anything about it. at least as a member of the commission, i must say i have no information that we have zone anything. . >> let me just make a couple of points, obviously the pipeline is -- the commissioner has a right to have his opinion, but obviously the pipeline is somewhat out of our jurisdiction another the ftc and when he refers to -- i do agree with you generally that when you have more supply, that you tend to reduce prices. i would also say this about the

task force. i think what commissioner rust is speaking to, we're actually doing an investigation into refinery pricing. so that's a different pattern. so that was the clarification i wanted to make. >> that completes my questioning. >> mr. diaz bellard. >> thank you very much mr. chairman. chairman, commissioner, privileged to have you here. i have really three questions on three different issues and i don't know if you have an opportunity for a second round. let me see if i can get all three of them in or not. one of them is i don't have to tell you how the economy is hurting small and bid sizmid si businesses. we have in other parts of the

country, we have mortgage scams, et cetera, which is making a tough situation worse. now when you then have an as example, for example, if i could use an example, if you have a chinese manufacturer that steals software from other it, information technology, it gives you an unfair technology price wise. obviously it puts that american company at a disadvantage. you know that there's a -- i guess there was a national association of -- it's not attorney general, it's attorneys again. they sent a letter in late november to -- urging the commission to take actions, among those 29 attorneys general, here are our two questions. what can the ftc do to combat these unfair trade practices,

number one, and number two is, are you willing to work with attorneys general, including general bondy in the state of florida on that issue, if you are in fact planning on doing anything on that. that's one issue, and in the interest of brevity, let me get to the other issue, which is the 21st amendment grants states the right to govern their own alcohol practices. does the ftc intend to use it's resources to weigh in on state laws and regulations regarding alcohol sales and distribution? and if so, in what capacity would you be doing that? so those are the two separate issues. >> let me take the first one first, and i'll take the second one after that. we got a letter from 36 state attorneys general plus three territorial attorneys general including the attorney general

of puerto rico. and there is a very serious problem which you just documented, which is what happens when there's all sorts of pirate software out there that gives foreign competitors unfair advantage against american competitors, because they pay for licensing, and they buy commuputers. it's a complicated one, because when the concreted our agency, they gave us limited remedies, we don't put people in jail, but broader jurisdiction. for unfair methods of composition. and commissioner rush has been a leader in using this broader jurisdiction. so it's sort of a number around the anti-trust laws. because this is an important issue and also because quite frankly some in the business community have pushed back very vigorously about our use of

this, won't make us stop using it, we have taken some time to finish up a response. we should have it out very, very soon and i think what we're going to do, in fact the attorneys general association is meeting in washington, one of the leaders is pam bondy which we work with a lot on scams and a variety of other matters. >> we have got lots of scams in florida. >> we can talk about that in the context of our possible miami office a little bit later. and another is rob mckenna, the ag of washington. i hope to talk to them in the next couple of days. >> i don't have anything to add. >> on the second question about alcohol practices, in states, we have occasionally when asked by a state lawmaker weighed in about these issues, they're going back to when tim meares

first chairman under bush 43 read a report on competition in wine sales, we have been involved from time to time in this issue. if there's a particular matter, i'll circle back with your office and try to give you a sense of whether they're going to start to think about doing something. also the states are the one who is would regulate alcohol for a safety perspective. >> mr. yoder? >> thank you, madam chair, chairman, i appreciate you being here today. we have a very difficult task in front of us in congress and one that's not lost by both of you gentlemen and anyone on the panel and that's how we find a way to balance the federal budget, find a way to cut spending and get our federal spending back in line with our resources. i was really intrigued by the conversation we were having towards the early part of the

hearing, regarding the 59 additional ftes, regarding the selling of the building and as we are looking for additional savings, one of the standards we have to use here, relates to would we, could we justify borrowing from our grandchildren to fund the expense of the agency. and is the expense or the increase -- i know your budget is going down, but as we try to find 10%, 20% more from agencies, what are the types of changes that we could make at the ftc to make those reductions. i will tell you when i'm home--and cut more spending from other areas. i know that's heart breaking. >> we didn't start those questions or those comments. >> when we're looking at places