it's supported by a number of companies. there are 100 companies, major marketers doing 90% of internet rallying that have come up with little icon. you can click onto opt out of advertising. but it's not a regulatory idea. it's about best practices. >> thank you for your time today. just a couple of questions and i'll have some to submit for the record. kind of a followup. what similarities or differences between the cbs deliberations and the current concerns.

what can you identify for the sub committee? >> uh, sure. cbs care mark. well, we approved the cbs care mark merger maybe in 2006, i want to say. somewhere around there. that was one pharmacy and one pbm. and then we went back and after we had some complaints, about whether cbs was violating the terms of the consent, we went back and we looked at their practices and did an investigation and found that they were in violation. they put some consumers into the doughnut hole by miscalculating the amounts they owed earlier

than we should. so we got a complete redress. so coming back to your question, one was a merger of pbm and retailer, essentially. >> horizontal competitors. >> as has already been mentioned, tri care program is very important to me. and this is for you, mr. chairman. should the fdc approve the merger, you believe the new company's control over the 30% of the retail market will benefit the next round of bidding, or will it detract from the program's ability to provide affordable prescription access to american military families? >> so i don't want to prejudge and answer here or where we're going with this investigation. but i will say this.

our staff is working on this, on the military aspects, and i honestly haven't thought about this until now. but why don't we get back to you, consistent with this time. under the statue, the clayton act. if an agreement may lessen competition in a line of commerce. we have to challenge it. and that's the standard we apply. it does, we'll challenge a deal. and if after reviewing it we find that it doesn't, raise prices, reduce choice, then we won't. but we'll get back to you with what we can tell you about that. >> commissioner, any thoughts? >> well, the only thought i have, congressman womack is the last thing we want to do is mandate, require an open network.

because 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 respect to prices or terms of sale of the products. >> tlg not a personal on p panel not getting questions at home about what can be done about the ever increasing price of gasoline and transportation fuel and i was reading through your testimony that said november of '09 the market na niplation rule became final.

what direction are you taking? back at home, people say to me all the time, and it's very believable. consensus of opinion is that there's manipulation going on. and so where are we? >> so, look, we're ofblt aware of how the increasing price of gas hurts middle class particularly. it means people have less money to buy necessities. and we have an open investigation. we found some anomalies in refinery -- among refineries. the utilization rates were going down. the profits are going up. we opened up an investigation a little broader into whether there's any market manipulation or anti-trust violation. now having said that, i think, you know, time and time again when we look at this we know the largest factor in the price of

gasoline is opec, or the prices we pay for wholesale, they set output. and so it's a very, you know, we have cases to block oil company mergers when exxon was selling refineries in maine. it's a difficult process. i hear about it e from my neighbors and every time i fill up at the pump. if we find violations first, we'll go after it. >> well, i do have a view about

this. and i disagree with the chairman about this particular matter. our bureau of economics is a worldwide market. and that there are very few things that we can do about it as the fdc 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 fdc is a member. to investigate price manipulators. and i would say yes. for three reasons. if they do control the market and it's a worldwide market, then anything that can be done with respect to exploration including the 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's political. and i say that as somebody who has a small farm along with my wife in the nebraska. so far they have done nothing except sit on its hands. it's been nothing except a charade, designed to let the public foe, 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 done anything. >> so let me make a couple of points. commissioner rush has the right to have his opinion. obviously the pipeline is somewhat out of our jurisdiction at the fdc. i agree with you generally when you have more supply you tend to reduce prices. i would also say this about the fask force. he was referring to a task force that has a number of agencies on it. we are actually doing an investigation into refinery prices. so that's a different matter. that's the clarification i want to make.

>> thank you, we will accept the questions that you have for the record. >> thank you very much, madame chairwoman, mr. ranking member. it's a pleasure to be with you again. commissioner, pleasure to have you here. i have three questions on two separate issues. i don't know if we'll have an opportunity for a second round. >> absolutely if you would like one. one of them is, and i don't have to tell you all how is economy is hurting. particularly small and mid-sized businesses. not only do we have usual pressures, we have in other parts of country mortgage scams that is making a tough situation worse. now, for example, if i could use an example, if you have a chinese manufacturer that steals software or the it, information technology, and gives them an

unfair advantage price wise. the other companies have to buy the product at a real price. it puts that american company at a disadvantage. you know that there's the national association of attorney -- it's not attorney generals. >> yes. >> they sent a letter to the commissioner in late november to take action. so here are two questions. what can they do to combat the unfair trade practices? number one. and number two, are you willing to work with attorneys general including general bondi in the state of florida on that issue, if in fact you are planning to do anything on that. and let me get to the other

issue. the 21st amendment grants states the right to do their own alcohol practices, including how it's distributed to consumers. does the fec intend to use the 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. >> okay. let me take the first one first, and i'll take the second one after that. we got a letter from 36 state attorney general plus territorial attorney general. including the attorney general of puerto rico. and they raised a very serious problem. which you just documented. which is what happens when there's all sorts of pirated software out there that gives foreign competitors and unfair advantage over american companies because they pay for licensing. they buy computers.

and it's complicated, too. when the congress created our agency, they gave us limited remedies. we don't put people in jail. but for unfair methods of competition. commissioner rosch has been a leader. so it's a number around the anti-trust fund. so because this is an important issue and because there have been sop in the business community who have pushed back very vigorously about our use of this. we'll make us stop using it. we listen to all stake holders. we have taken the time to finish up a response. i think what we're going to do, and in fact, the attorneys general association is meeting in washington.

one of the leaders is pam, who we work with on scams and a variety of other matters. >> we have lots of scams. >> we can talk about that in the context of the miami office a little bit later. and another is rob mckenna of washington. i'm hoping to talk to them a little bit more. >> i don't have anything to add. zblo on the sec question about alcohol practices in state. we have occasionally weighed in about the issues. going back to when the first chairman you should bush 43 read a report on competition in whine sales. we've been involved from time to time with this issue. if there's a particular matter, i'll circle back with your office and try to give you a sense of what we're thinking about.

>> great. >> but we would like to see more competition. we recognize they regulate alcohol from a health and safety regulatio regulation. >> thank you, madame chair. i appreciate you both being here today. we have a difficult task in front of us in congress and one that's not lost by you gentlemen or anyone on the panel. that's how we find a way to balance the federal budget, find a way to cut spending and get federal spending back in line with the resources. i was really intrigued by the conversation that we were having towards the early part of the hearing regarding the 59 additional ftes, regarding the miami office, regarding the selling of the building. as we're looking for additional savings, one of the standards we have to use here relates to

could we justify borrowing from our grandchildren to justify the expeeps. and is the expense or the increase, i know your budget is going down, which he pointed out. and that's notable. but as we try to find 10% more, 20% more from agencies. i can tell you when i'm home, a lot of people come to town hall meetings saying you need the cut more spending from other areas. >> you could. you could have them come to me. then regulatory agencies that don't have a lot of champions across the country in the hearts of the american citizens. so huh would we justify not making deeper cuts in the fdc, and how do we justify their expeepses and where can we make additional reductions?

>> there are a lot of good questions embedded in the longer question. maybe i can take a crack at them. so one thing that your question acknowledges is not all agencies are the same. a number of agencies are newer to congress and the appropriations committee. in our case in fy 2011 we had an operating budget of $276 million. we returned $258 million to consumers, in redress, to the federal government in fines and fees. so i think you get a tremendous return, the taxpayers do, from the ftc. now let me take a few other issues. one is the miami office. so we will not do this, and i don't think we could from the sub committee.

and as he pointed out, there are a number of -- actually, the miami area south florida among metropolitan statistic call areas has the highest incidents of identity theft of any msa in the country. south florida has grown. it's kwa group led in size in the last 50 years. so we think that if we -- it's a majority of the commission. that if we put up a small office, again, for reworking, from current resources. and there are terrific spanish language attorneys there. it's important to point out. it's not 59 additional fds. and we're tiny.

you're going to see some big agencies. we're a tiny agency by washington standards. we're about 1,175. we're operating at 1,155. so i think it's something like -- so we're only asking for ten additional fdes. and believe me, if there was one thing that had to go first, although i would hate to see it happen, from our slight increase, it would be them. technology is critically important to us. it's how we keep up with the bad guys. so it's -- so i think it's hereto 49 or 59 and then the request adds ten additional. we've already back filled most of those. i think we're operating at 1155 or 1156 out of 1176 right now. >> well, you know, frankly, i think each of these projects is probably worth while, but not now. that's the problem. the problem is one of austerity.

we are operating in a period of real austerity at the present time. that said, can we hand some of this stuff off to the states the chairman has, for example, talked about identity theft being a real problem in south florida and i agree with that, but that is quintessential theft. it's handled by state -- best handled by state and local authorities with, to be sure, a very large consumer education component from us. but we are not in a position to handle this. what we are in position to do is to handle security breaches, which feeds identity theft, and we do that. there's no question about that. the cfpb, it's here. it's here. i lost that fight and so it's

here. but we share jurisdiction now with the cfpb. i do not understand why we don't have a reduction in our ftes as a result of sharing jurisdiction with the sister agency which has taken 21 of our ftes away from us as it now stands. now, the chairman also mentioned during his remarks that we had contributed fees and fines which exceeded our budget request. >> slightly less, but yes. consistent with. >> okay. the budget submission assumes, that's before this committee, it assumes total offsetting collections of $136.5 million from hsr filing fees and do not call fees, but i'm concerned

that the agency will never be able to collect those fees. the fact of the matter is that the actual collection of fees over the years has varied widely, and the ftc has only met its estimate of hsr fees once during the last ten years. accordingly, i question the utility of providing an estimate of offsetting fees to this committee. >> if i could just respond. are you done? let me just make a couple of points. first of all, i have the greatest respect for rich cordray. he's a terrific first head of the cfpb and they're going to do very good work. down the road in a few years, i could agree with commissioner rosch wholeheartedly. i don't disagree entirely with him now. but it's an untested agency. and the actions it's taking,

while -- while it is -- while there are concerns raised about it and people who would like to undo it, are, you know, should not be used as a justification for us to sort of cede the field. again, we have brought 90 cases involving debt consolidation and foreclosure rescue scams and work at home scams and you know, we do really good work and by the way, from time to time, we have had to send people down to south florida and have them deputized as assistant u.s. attorneys to prosecute cases. that's at an expense to the agency. and so i think over time, you may want to and we may want to move people out of predatory or financial fraud, but i think at this point, when as you have pointed out, people are still suffering, it's not precisely the time to do that. now, having said -- having said

that, again, we understand the need for austerity. we understand the need for agencies to tighten their belts and we also understand that it is this committee, that is going to determine our budget and so if you end up keeping us -- if you end up not giving us all of our request and by the way, when i started -- commissioner rosch was part of this, when we started on the commission, i started late 2004, you started a year, little more than a year later, in a time that wasn't -- where the economy was growing, we were both for growing our agency which is considerably smaller than it was in say 1979, when the population of the united states was 200 million, not 300 million. so i have a great respect for his principled position, but i also think that given our effectiveness as an agency and given the number of obligations that congress has placed on us,

really especially, especially if we undergo sequestration, the quality of our work is going to be very strained by the quantities of demands placed upon us and we're not going to be able to do the things for all of your consumers and for the consumers we try to help that we're trying to. so. >> if i might, just a quick follow-up. as we try to make reductions we have to prioritize things. has the agency gone through and prioritized those regulatory functions that it feels are of critical nature versus those that may be more of a want as opposed to a need, and i just note the ftc's engagement in this interagency working group on the regulation of advertising, on cereal and in peanut butter and all these things, i don't know what extent the ftc is actually engaged in that endeavor, but things like that, may not be of the critical nature that maybe some of the other functions that you're discussing. so has the agency gone through

and said, look, some of these things we would do in a moment of flush resources but the committee on financial services is telling us to find the lowest 10% and can you identify what those are? >> that's a really great question. by the way, just food marketing i'm hoping to not have to talk about this too much, but that food marketing interagency working group report was mandated by the senate appropriations committee. it was sam brownback and tom harkin. obviously, we are keenly aware of the new language the appropriations committee has given us in our fy '12 appropriation. i think from the perspective of the commission, it's probably time to move on to other areas. that would not be a priority. but food marketing to kids is a priority and childhood obesity is a priority but that particular initiative i think we -- it's time to move on.

now, under the chairman before me, who then served as commissioner with commissioner rosch and myself, he started an initiative called ftc at 100 in which we went out to all our stake holders, looked internally what should our priorities be in the coming five or ten years. i'll get you a copy of that, congressman, and it is something that -- it was a really good study that i go back and look at from time to time. it talks about what our priorities ought to be and by the way, what our priorities ought to be depending on sort of different -- different types of growth or levels of growth. i think we know now we are going to have little or no growth and possibly a decline in our work force going forward. hopefully not a decline in the work force going forward. so we try to do that. i will say this. i don't want to throw another agency on a bus -- under a bus, but i was on a panel with commissioner from another agency and someone asked me that

question, it was at a luncheon and someone in the audience asked me the question well, do you ever take a look at your agency to see where you need -- what you need to do going forward in five or ten years and i just basically gave him an answer about ftc at 100. the other commissioner whispered to me i wish we would do that. we're pretty good at that. we're not perfect. but self-examination and examination by your outside stake holders' businesses, consumer groups, others who follow your agency, is a good thing to have. a good thing to do. >> i don't think so. and this is an area where i disagree with the chairman. you know, he has mentioned to you that we used to have, i don't know, 1750 -- >> little more. >> close to 1800 ftes back in the '70s, and today, we have 1200. you know, frankly, i think that

every law firm in the united states has seen a similar contraction of its support staff, and the answer can be summed up in one word. computers. that is exactly what has happened. and yet, we have not contracted accordingly. i think there's more belt tightening that we can do in terms of support staff, because of computers. it's as simple as that. >> i would just add i'm not so sure -- clearly computerization is a reason for why government generally has downsized and can downsize to some extent. i don't think that going from almost 1800 ftes in 1979 down to about 900 in 1989 and then congress, by the way, has been very good about growing our agency when you can do it, is entirely about computerization.