Federal Trade Commission Research Articles

Dangers of Oxybenzone in Sunscreens on Coral Reefs: Proposed Policy Approaches

Sunscreen was developed to combat the harmful effects of skin exposure to ultraviolet radiation, but organic UV filters like oxybenzone pose a threat to coral reefs by promoting bleaching incidents, damaging coral DNA, and interfering with coral larvae. Oxybenzone has also been found to cause a wide range of reproductive and developmental harm within other marine organisms, like fish and invertebrates. While there are alternative sunscreens that are less detrimental to coral such as mineral-based products, toxic oxybenzone-based sunscreens are still popular among cosmetic companies and consumers. Scientific findings in the past decade have demonstrated a connection between high concentrations of chemical UV filters and the destruction of marine ecosystems. This knowledge has prompted some governments in coastal regions to pass legislation aiming to limit the use of sunscreens containing these chemicals. These regulations provide beneficial case studies that can be used to develop further effective policies to federally ban these products in the United States. The jurisdictions of Hawaii, the US Virgin Islands, and Key West are model examples of successful implementation of such laws domestically. Based on efforts from such coastal communities, our suggested best practices to eliminate the threat posed by harmful sunscreens are to promote alternative sunscreen use, to define ‘reef-safe’ within the Federal Trade Commission’s Green Guides, and to impose a nationwide ban on oxybenzone. These recommendations provide a comprehensive plan to protect the United States’ fragile marine ecosystems.

New evidence on the impacts of cross-market hospital mergers on commercial prices and measures of quality.

To examine the impact of "cross-market" hospital mergers on prices and quality and the extent to which serial acquisitions contribute to any measured effects. 2009-2017 commercial claims from the Health Care Cost Institute (HCCI) and quality measures from Hospital Compare. Event study models in which the treated group consisted of hospitals that acquired hospitals further than 50 miles, and the control group was hospitals that were not part of any merger activity (as a target or acquirer) during the study period. We extracted data for 214 treated hospitals and 955 control hospitals. Six years after acquisition, cross-market hospital mergers had increased acquirer prices by 12.9% (CI: 0.6%-26.6%) relative to control hospitals, but had no discernible impact on mortality and readmission rates for heart failure, heart attacks and pneumonia. For serial acquirers, the price effect increased to 16.3% (CI: 4.8%-29.1%). For all acquisitions, the price effect was 21.8% (CI: 4.6%-41.7%) when the target's market share was greater than the acquirer's market share versus 9.7% (CI: -0.5% to 20.9%) when the opposite was true. The magnitude of the price effect was similar for out-of-state and in-state cross-market mergers. Additional evidence on the price and quality effects of cross-market mergers is needed at a time when over half of recent hospital mergers have been cross-market. To date, no hospital mergers have been challenged by the Federal Trade Commission on cross-market grounds. Our study is the third to find a positive price effect associated with cross-market mergers and the first to show no quality effect and how serial acquisitions contribute to the price effect. More research is needed to identify the mechanism behind the price effects we observe and analyze price effect heterogeneity.

The birth of femtech lays fertile grounds for pregnancy discrimination in the workplace

AbstractFemtech refers to electronic devices, software, or other technology relating to women's health. Employers are contributing to the rapid growth of femtech by adopting femtech products for workplace wellness programs. Due to a lack of federal laws or regulations, employers can access the personal, intimate information their employees record in these femtech products which can subject employees to pregnancy discrimination. Congress must enact a comprehensive consumer rights law and give the Federal Trade Commission more plenary power to prevent femtech companies from selling consumers' private health information to employers.

Private Equity-Acquired Physician Practices And Market Penetration Increased Substantially, 2012-21.

Private equity (PE) firms have been acquiring physician practices at an increasing rate, raising concerns about such firms' penetration at the physician level into local markets and the impact on health care quality and prices. However, limited knowledge exists about the extent of PE firms' control in local markets. By linking data on PE acquisitions to physician data and using full-time-equivalent physicians as the base of assessment, we estimated the local market share of each PE firm within ten physician specialties at the Metropolitan Statistical Area (MSA) level. PE-acquired physician practice sites increased from 816 across 119 MSAs in 2012 to 5,779 across 307 MSAs in 2021. Single PE firms had significant market share, exceeding 30percent in 108 MSA specialty markets and exceeding 50percent in 50 of those markets. The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators, and policy makers.

Practice Consolidation Among US Medical Oncologists, 2015-2022.

Health care consolidation has significantly affected cancer care delivery, with oncology practices undergoing substantial consolidation over the past two decades. This study investigates practice consolidation trends among medical oncologists (MOs), factors associated with consolidation, and changes in MO geographic distribution. Medicare data from 2015 to 2022 were used to assess MO practice consolidation in hospital referral regions (HRRs), linked with regional health care market data and physician demographics. The Herfindahl-Hirschman Index (HHI) was used to measure consolidation, and the Gini coefficient was used to measure MO distribution across counties. Multivariable linear regression explored factors associated with MO practice consolidation. Between 2015 and 2022, the number of MOs increased by 14.5% (11,727-13,433), whereas the number of MO practices decreased by 18.0% (2,774-2,276). The mean number of MOs per practice increased by 40% (4.26-5.95; P < .001). The percentage of MOs in small practices decreased, whereas larger practices saw an increase. MO consolidation, as indicated by the HHI, increased by 9% (median HHI, 0.3204-0.3480). HRRs with higher baseline hospital consolidation and more hospital beds per capita were more likely to have MO practice consolidation. Despite MO practice consolidation, the county-level distribution of MOs did not change substantially. On the basis of Federal Trade Commission classifications, MO practices were highly concentrated in 2015 and consolidated even further by 2022. While distribution of MOs at the county level remained stable, further research is needed to assess the effects of rapid consolidation on cancer care cost, quality, and access. These data have important implications for policymakers and payers as they design programs that ensure high-quality, affordable cancer care.

The deterrence effect of M&A regulatory enforcements

Economic, political, and public policy uncertainty affect merger and acquisition (M&A) activity. In this paper, we use Department of Justice (DOJ) and Federal Trade Commission (FTC) interventions in the M&A market to investigate whether regulatory interventions also matter. Our results support this conjecture. Using the Hoberg and Phillips (2010) similarity scores to identify product market competitors, we confirm a clear and significant DOJ/FTC regulatory enforcements' deterrence effect on future M&A transaction activity, a result robust to many alternative specifications. Additional evidence indicates that this deterrence effect is (at least partly) driven by both regulatory outcome uncertainty and regulatory intervention probability channels. Our results identify an (un)intended consequence of antitrust regulation that affects M&A activity.

A STUDY OF COVID-19 EFFECTS ON THE IDENTITY THEFT LANDSCAPE

This research studies the impact of COVID-19 on the identity theft landscape using historical data published by the Federal Trade Commission. The data set included information about the number of identity theft reports for each state per year over a 6-year period, 2017 -2022. The dataset also included the number of reports for each identity theft category, providing a holistic view of the identity theft landscape. The data showed a significant increase in the number of identity thefts across all the states in 2020 compared to 2019; the percentage increase ranged from 45% to 1,801.1%. This coincided with the pandemic, which started in December 2019. The top 5 states that had the highest percent increase in 2020 are Kansas, Rhode Island, Maine, Washington, and Illinois. Moreover, in the year 2020, there was a dramatic increase across all the states in the number of identity theft reports related to government documents or benefits fraud, ranging from 207.7% to 33,236% increase compared to the year 2019. This was due to the sudden increase in available funds to help Americans during the pandemic, including unemployment benefits, stimulus checks, small business loans, etc., along with the expedited process to distribute the funds, which created ideal conditions for cybercriminals, especially identity thieves.

The Economic Analysis of Exclusive Contracts in Two-Sided Markets: Federal Trade Commission vs. Surescripts

The Economic Analysis of Exclusive Contracts in Two-Sided Markets: Federal Trade Commission vs. Surescripts

US Draft Merger Guidelines: Manifesto of Improvements or Step Back?

This paper critically evaluates the draft version of the US Merger Guidelines from 2023 (D23), which departs from the consumer welfare standard, sparking intense debates within the academic, professional, and business communities. D23, released by the US Department of Justice and the Federal Trade Commission, introduces a shift toward a more structuralist approach in horizontal merger assessment. The paper examines the diverse perspectives of D23, with some perceiving it as a populist move sidelining economic rationale and others viewing it as an attempt to base decisions on factual grounds and enhance antitrust activism. The discussion emphasises the importance of precision in defining relevant markets within D23, a crucial element in merger assessment. This analysis sheds light on the evolving landscape of merger policy, prompting critical inquiries into the future trajectory of competition law.

Guardians of the Consumer: A Comparative Analysis of Consumer Protection Laws Across Countries

In this comprehensive exploration of consumer protection laws across diverse countries, the focus is on comparing the intricate structures, strengths, and weaknesses that characterize these regulatory frameworks. The journey into the historical evolution of consumer protection regulations provides a contextual backdrop to the contemporary landscape, offering valuable insights into the motivations that led to their establishment and the hurdles encountered in their implementation. The historical lens through which we examine the evolution of consumer protection laws reveals a compelling narrative. As industrialization and mass production gained momentum in the early 20th century, consumers found themselves vulnerable to a myriad of risks associated with product safety, misleading advertising, and unfair business practices. The establishment of pioneering institutions such as the Federal Trade Commission (FTC) in the United States marked a watershed moment, acknowledging the need for regulatory oversight to protect consumers from these emerging challenges. The comparative analysis undertaken in this article seeks to unveil the diversity of approaches adopted by different countries in addressing consumer protection concerns. Some nations have opted for comprehensive and overarching legislation that encapsulates various facets of consumer rights, while others have chosen a sector-specific approach. The European Union's harmonization efforts stand out as an example of a unified approach, fostering consistency across member states. On the other hand, countries like India and Brazil have developed specific laws targeting deceptive advertising and unfair trade practices, showcasing a tailored approach to consumer protection. Examining the reasons behind the implementation of consumer protection laws reveals a shared commitment to rectifying inherent imbalances in the marketplace. These laws aim to level the playing field between consumers and businesses by ensuring product safety, preventing fraud and deception, promoting fair competition, and providing a structured framework for dispute resolution. The overarching goal is to establish trust and confidence in economic transactions, recognizing that informed and protected consumers are essential for the proper functioning of a healthy market. Despite these noble intentions, the implementation of consumer protection laws faces a host of challenges. Enforcement issues, often stemming from limited resources and the complexity of global supply chains, pose significant obstacles to the effective execution of these regulations. Furthermore, cultural and regulatory differences among countries create complexities in achieving a harmonized global approach to consumer protection. The comparative analysis sheds light on these challenges, emphasizing the need for collaborative efforts and innovative solutions to overcome these hindrances. As the article draws to a conclusion, reflections on the future of consumer protection become crucial. Identifying potential areas for improvement is essential to adapt these laws to the evolving dynamics of the global economy. The article encourages a forward-looking perspective, urging policymakers, businesses, and consumers alike to engage in an ongoing dialogue to refine and strengthen consumer protection laws. By addressing the challenges and seizing opportunities for enhancement, the global community can collectively work towards creating a more secure and equitable marketplace for consumers around the world.

Practice consolidation and distribution of U.S. medical oncologists, 2015-2022.

51 Background: From 2007 to 2017, oncology practices experienced high rates of consolidation. Greater market consolidation may facilitate greater efficiency but could also threaten access to care. Since 2017, the extent and effects of oncology consolidation have not been studied. Methods: Using Medicare data from 2015 to 2022, we calculated the number of medical oncologists (MOs) working in solo (1 MO), small (2-10 MOs), medium (11-24 MOs), and large (25+ MOs) practices. We estimated the level of MO consolidation in a Hospital Referral Region using the Herfindahl-Hirschman Index (HHI), a measure of consolidation ranging from 0 to 1 (with higher numbers corresponding to greater consolidation). We analyzed the distribution of MOs by measuring the association between the proportion of MOs practicing in a county and the county population. This association was quantified using the Gini coefficient, which ranges from 0 (equal distribution of MOs) to 1 (unequal distribution of MOs). We also created a multivariable linear regression model to assess the association of market factors with changes in HHI. Results: From 2015 to 2022, the number of MOs increased 14.5% (11,727 to 13,433), while the number of MO practices decreased 18.0% (2,774 to 2,276). During this period, the percentage of MOs working in solo or small practices decreased from 8.8% to 5.7% and 37.2% to 28.1%, respectively. The percentage working in large practices increased from 33.6% to 43.7%. The mean number of MOs per practice increased from 4.26 to 5.95 (p&lt;0.001) and the median HHI increased from 0.3204 to 0.3480. The distribution of MOs did not change significantly at the county level: the Gini coefficient was 0.1288 in 2015 and 0.1254 in 2021 (p&gt;0.05). In the multivariable analysis, regions with higher levels of baseline hospital consolidation (p&lt;0.001), greater numbers of hospital beds per 1,000 persons (p=0.02), and lower levels of baseline MO practice consolidation (p&lt;0.001) were associated with higher consolidation. Conclusions: Per HHI cutoffs of the Federal Trade Commission, the oncology market was highly consolidated in 2015 and underwent further consolidation by 2022. Despite rapid consolidation, the geographic distribution of MOs did not change substantially. Further research is needed to understand the impact of consolidation on cancer care access, quality, and cost. [Table: see text]

Self-Preferencing

When markets at successive or complementary stages are imperfectly competitive, firms that operate at multiple stages typically have a strong incentive to purchase from, sell to, or otherwise coordinate with its own operations at adjacent stations compared with those of individual firms. But, to the extent that such self-preferencing eliminates double marginalization that would occur under vertical separation or otherwise facilitates coordination that is difficult to accomplish between firms, competition rules that discourage self-preferencing, such as restrictions on vertical mergers or integration, can harm consumers. In 2020, the United States Department of Justice and Federal Trade Commission issue revised vertical merger guidelines that promised enforcement that more nearly resembles how they review horizontal mergers – that is, by predicting effects on static pricing incentives. But the economics of how vertical mergers on pricing incentives is more complicated than the economics of how horizontal mergers affect pricing incentives. If U.S. enforcement is based on a consumer welfare standard, the U.S. agencies will struggle to find a robust methodology for distinguishing anticompetitive from procompetitive vertical mergers. Self-preferencing has also played a key role in allegations of anticompetitive behavior in technologically advancing industries. A review of past allegations of anticompetitive product innovation against IBM, Microsoft, and Google reveals the challenges in designing rules that limit self-preferencing without acting as a drag on innovation.

Profiling consumers who reported mass marketing scams: demographic characteristics and emotional sentiments associated with victimization

AbstractWe examine the characteristics of consumers who reported scams to the U.S. Federal Trade Commission. We assess how consumers vary demographically across six scam types, and how the overall emotional sentiment of a consumer’s complaint (positive, negative, neutral/mixed) relates to reporting victimization versus attempted fraud (no losses). For romance, tech support, and prize, sweepstakes, and lottery scams, more older than young and middle-aged adults reported victimization. Across all scam types, consumers classified as Black, Hispanic, and Asian/Asian Pacific Islander were more likely than non-Hispanic white consumers to report victimization than attempted fraud. Relative to complaints categorized as emotionally neutral or mixed, we find that emotionally positive complaints and emotionally negative complaints were significantly associated with victimization, but that these relationships differed by scam type. This study helps identify which consumer groups are affected by specific scams and the association between emotion and victimization.

Disclosure in Incentivized Reviews: Does It Protect Consumers?

The well-documented rating inflation of incentivized reviews (IRs) can mislead consumers into choosing a product that they would otherwise not buy. To protect consumers from this undesirable influence, the U.S. Federal Trade Commission recommends that reviewers conspicuously disclose any material connection they may have with sellers. In theory, such disclosures safeguard consumers by motivating reviewers to be truthful and inducing consumers to discount inflated IR ratings. Our research finds, however, that IR disclosure accomplishes neither. Specifically, our empirical analysis of consumer reviews on Amazon reveals that, even with disclosure, (1) rating inflation of IRs remains, and (2) this inflation boosts sales at consumers’ expense. Finally, we propose an alternative approach to eliminate rating inflation of IRs and empirically demonstrate its effectiveness. These findings have important implications for consumers, firms, and ongoing policy discussions around IRs. This paper was accepted by Duncan Simester, marketing. Funding: S. Park gratefully acknowledges financial support from the Darla Moore School of Business Research Grant Program at the University of South Carolina. W. Shin gratefully acknowledges financial support from the Brian R. Gamache Endowed Professorship at the University of Florida. J. Xie gratefully acknowledges financial support from the JCPenney Endowed Professorship at the University of Florida. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.00930 .

LAC and OPI advise FTC to protect privacy rights of people with SUDs

In an August 8 letter to the Federal Trade Commission (FTC), the Legal Action Center (LAC) and the Opioid Policy Institute (OPI) urged the agency to clarify and strengthen its proposal to modernize the Health Breach Notification Rule (HBNR). The proposal by the FTC, published in the Federal Register on June 9 (https://www.federalregister.gov/documents/2023/06/09/2023‐12148/health‐breach‐notification‐rule), does not adequately cover substance use disorders (SUDs), but rather refers to categories and silos like “physical health” and “mental health.” This leaves interventions for SUDs — and drug use itself — in a “regulatory and policy blind spot,” according to the letter, a copy of which was obtained by ADAW.

A Review of Cybersecurity as an Effective Tool for Fighting Identity Theft across United States

The study is focused on identity theft and cybersecurity in United States. Hence, the study is aimed at examining the impact of cybersecurity on identity theft in United States using a time series data which covers the period between 2001 and 2021. Trend analysis of complaints of identity theft and cybersecurity over the years was conducted; also, the nature of relationship between the two variables was established. Chi-Square analysis was used to examine the impact of cybersecurity on identity theft in United States. Line graphs were used to analyze the trend in the variable. Time series data was used in the study and the data was obtained from secondary sources; Statista.com, US Federal Trade Commission, Insurance Information Institute and Identitytheft.org. Result from the study revealed that consumers’ complaints on identity theft were on the increase every year. Total spending of the economy (both private and public sector) on cybersecurity was on continuous increase over the years. More than 100% of spending in 2010 was incurred in 2018. The Chi-Square analysis revealed that cybersecurity does not have significant impact on identity theft. The study recommended that the government increase the level of public awareness to ensure that members of the public protect their personal and other information to ensure that they are not compromised for fraud or identity theft. Organizations also need to invest more in the security system and develop policies that will support the security system. At the country level, international treaties and collaboration should be encouraged to prosecute the fraudsters hiding behind national borders.

Fighting fake reviews: Authenticated anonymous reviews using identity verification

Fake reviews have become a pervasive problem in the realm of online commerce, affecting businesses and consumers alike. These fraudulent reviews can cause significant damage to the credibility of companies and negatively impact consumer welfare. While various platforms, such as Yelp and Amazon, have implemented measures to combat fake reviews, these efforts have been largely ineffective and, at times, even exacerbated the problem. As a result, on November 8, 2022, the Federal Trade Commission announced that it is soliciting input for possible regulations around ways to fight fake reviews. The growing sophistication of Artificial Intelligence—particularly generative AI technologies like ChatGPT—worsens the problem by enabling the production of human-like fake reviews at an unprecedented scale. This lends new urgency to the fake review problem, so it is imperative to examine the pros and cons of extant approaches and propose alternative approaches that are better equipped to tackle the issue. In this article, we introduce a novel approach using digital identity verification, which involves verifying a user’s identity via various forms of digital information that represent the individual and have not been applied to online reviews. We highlight the limitations of extant techniques and outline ways in which digital identity verification may be a promising solution to the problem of fake reviews. Potential benefits and challenges, as well as the effectiveness of our proposed approach in addressing the issue of fake reviews, are discussed.

Competition and the Regulation of Fictitious Pricing

Fifty years ago, the Federal Trade Commission stopped enforcing its fictitious reference pricing guidelines, emphasizing the search qualities of price and the belief that competition would drive out deceptive behavior. Yet this practice of posting false, inflated comparison prices alongside sale prices has proliferated. Building on prior analytic work and the documented effects of reference pricing on search behavior and consumer choice, the authors develop a descriptive model explaining why fictitious reference pricing has spread instead of being extinguished by competition. After summarizing the model with a series of generalizations, the authors consider potential regulatory solutions to the problem. They propose that disclosure of the true normal price charged may be the only solution that could plausibly influence both consumer and firm behavior. Then, based on the existing literature, interviews with practitioners and regulators, an analysis of other nations’ approaches, and the results of a laboratory study of 900 consumers to examine how they integrate “true normal price” information into deal evaluations, the authors develop a set of propositions about the likely effects of requiring firms to disclose recent selling prices for goods, identifying both potential benefits and challenges associated with such a requirement.

Geographic Market Definition in Commercial Health Insurer Matters: A Unified Approach for Merger Review, Monopolization Claims, and Monopsonization Claims

We provide a methodology for geographic market definition when the product(s) being purchased or sold has an intrinsic geographic component, such as (1) the sale of commercial health plans and (2) the purchase of health care providers’ services by commercial health plans. In these situations, we show that a straightforward application of the Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission (hereafter, Guidelines) that uses the customer or supplier location to define the geographic market is not sufficient and can result in markets that are unintuitively small. This is often addressed by applying an assumption about aggregating based on similar competitive conditions. The practice of relying on the assumption of similar competitive conditions across counties, metropolitan statistical areas, or other geographic areas, without a methodology to support this assumption, could lead to market definitions that are too narrow or too broad and could influence the assessments of the extent of market concentration and the presence or absence of market power. We outline a framework that is consistent with the Guidelines and does not require a reliance on the assumption of aggregation based on similar competitive conditions. JEL Classification L12, L40, K21, D42, I11

Non‐Competition Agreements: An Invitation for the Union Organizer

One of the hot topics in labor and employment in 2023 has been that of non‐compete agreements. Over the past several years, many states have taken steps to limit their enforceability or, in the case of California, outright ban them. Earlier this year, the Federal Trade Commission announced efforts to curb the use of non‐compete agreements. Not to be outdone, the NLRB's General Counsel also entered the fray and recently issued a memo finding that certain non‐compete agreements violate the National Labor Relations Act (NLRA).