Mr. KIRKPATRICK. Yes; let me start with the matter of secrecy first. I believe there is a standing or recognized rule of the Commission at the moment which requires as to all matters, investigatory in nature, that any communication, ex parte in nature, be given in a written memorandum to each Commissioner and circulated to each other Commissioner.

I think that is a fine rule, but whether it goes far enough, I have not yet made up my own mind.

With respect to adjudicatory matters, there should be no ex parte communications whatsoever. I think the Commission's rules are clear on that.

The CHAIRMAN. Maybe the other committee members want to ask about this, but you are suggesting you are going to proceed, should you be confirmed and you will get my vote-you will pursue these matters that you found out and criticized.

Mr. KIRKPATRICK. Yes; indeed.

The CHAIRMAN. I think one of the good things that the Federal Trade Commission does in a basic way is these advisory opinions. Because business, good business does take advantage of it. By that I mean to find out how they can remain good and not violate any law. I hope the basic thrust of that won't be violated in any change.

Mr. KIRKPATRICK. I anticipate no detailed change, sir.

The CHAIRMAN. Then the public disclosure of voluntary settlements, I imagine you will go into that.

Mr. KIRKPATRICK. Emphatically that will continue; yes, sir.

The CHAIRMAN. Now I don't want to pursue in any detail-maybe the other members of the committee do what Commissioner Elman said, but as I read his speech, he was dealing more with the structure, the administrative structure of the Commission and where there should be some reforms made, or suggested them. You are familiar with that and you will look at it I am sure.

Mr. KIRKPATRICK. Yes, indeed, sir.

The CHAIRMAN. The Senator from Pennsylvania mentioned offices in 10 cities. Are they regional offices?

Mr. KIRKPATRICK. Yes, sir; there are actually 11 regional offices of the Commission, sir.

The CHAIRMAN. And the problem there has been-it always is with all of the independent agencies they set up these offices and the people have access to them, physical access, and this is true with the ICC, the FCC, the Power Commission, all of them, they set up the regionaĺ offices and put someone in charge, but when it gets down to something that really needs to be decided and moved upon quickly, they are either too timid themselves or they say, they hide behind the facade that they don't have the authority, it has to come back to Washington, it has to be mulled over back here and then back to them.

I am hopeful that if we are going to set up these offices that we give the people we assume they are going to be competent-give the people the authority to make the decisions.

Mr. KIRKPATRICK. I couldn't agree with you more, sir.

The CHAIRMAN. This has been the usual complaint.

Chairman Weinberger recommended to this committee that we establish vigorous enforcement procedures for the FTC in dealing with the Flammable Fabrics Act.

Mr. KIRKPATRICK. Yes, sir.

The CHAIRMAN. To me that is a question of convincing the Budget to give you a sufficient amount to administer the act properly.

Mr. KIRKPATRICK. In addition I understand there were some legislative proposals.

The CHAIRMAN. And the certification procedures and penalty provisions have to be enforced.

Mr. KIRKPATRICK. Yes, sir.

The CHAIRMAN. Are you a Republican or Democrat?

Mr. KIRKPATRICK. I am a Republican, sir.

The CHAIRMAN. Now the second question I have to ask is, do you intend to, as far as you know, barring some unforeseen possibility, intend to serve out the term you are to be appointed for?

Mr. KIRKPATRICK. That is my intention, sir.

The CHAIRMAN. Senator Cotton?

Senator COTTON. Thank you, Mr. Chairman.

I join the chairman in commending you for disclosing so much information, going to the extent of listing the clients of your firm in the past. However, there is one question we always ask and no personal reflection is intended or is to be inferred. On the matter of your investments I want to ask you, so it will appear in the record, do you know of any investments, or any interests you or the members of your family have, that you foresee giving rise to any possibility of any conflict of interest?

Mr. KIRKPATRICK. Save, sir, for those that are listed there, which are going to be disposed of, either committed to government obligations or to a so-called blind trust, I do not know, I have no knowledge of any such interests.

Senator COTTON. Thank you.

I gather that you are going to either dispose of them or put them in the blind trust as others have done in like situations?

Mr. KIRKPATRICK. That is my intention, sir.

Senator COTTON. Thank you.

Now, Mr. Kirkpatrick, the report of the American Bar Association group which you chaired contained the following statement:

Notwithstanding the great potential of the FTC in the field of antitrust and consumer protection, if change does not occur, there will be no substantial purpose to be served by its continued existence. The essential work to be done must then be carried on by other governmental institutions.

Would you care to comment on that? I am particularly interested to know what other governmental institutions would carry on if the Federal Trade Commission should prove inadequate?

Mr. KIRKPATRICK. I would like to comment first, sir, that it would be my hope and my purpose that the Federal Trade Commission will carry forward the very important and great purpose. I think under Chairman Weinberger, large steps have been made. I propose that and I hope that I will be able to, along with my staff and colleagues, be able to demonstrate that this Commission is and will continue to be and has been a fine force both in enforcing the antitrust laws and also with respect to consumer matters and false and misleading advertising. I see no reason this Commission cannot perform effectively its intended function.

Senator COTTON. Thank you.

I won't go into the matter of how you visualize the beefing up of enforcement, since I think other members of the committee have questions on that subject. But, in your statement made to the chairman regarding the matter of preliminary injunctions, for instance, it is my understanding that the ABA's report recommended that such injunctions be handled by the General Counsel and not by the Commission. Am I correct?

Mr. KIRKPATRICK. I would anticipate that would be one of the functions of the General Counsel's Office; yes, sir.

Senator COTTON. That would speed them up?

Mr. KIRKPATRICK. Very much so.

Senator COTTON. Is it your feeling that these preliminary injunctions should be entirely ex parte proceedings, or should the corporations, individuals, or parties against whom they are issued, be given a chance for a hearing?

Mr. KIRKPATRICK. Oh, I have no doubt that in the normal situation that notice at least to the proposed defendants should be given. Whether the situation would permit a hearing or not, I think that would depend upon a case-by-case basis of choice. But certainly notice, if it can be given. And a hearing of course under the Federal rules would be promptly forthcoming after any order would be entered by the court. And I would think normally there would be, it would require a hearing, but I would anticipate there would be emergency situations where that would not be desirable or possible.

Senator COTTON. Of course there is a certain impact on any business resulting from the mere issuance of a preliminary injunction. This may not be so much a financial impact as one adverse to its public image and relations. It could be rather grave and substantial. But, do you visualize the situation where no hearing would be held to prior issuance, unless the Commission acted to the contrary?

Mr. KIRKPATRICK. I think, Senator, that in the normal situation, if I recollect the rules of civil procedure under which we would be acting, that a hearing in any event would be required after entry of an order. And I would certainly not seek an ex parte order except in an extraordinary situation.

Senator COTTON. Again referring to the ABA Commission's report on the FTC; it notes the following:

The first important manifestation of that support should be the appointment of the Commission chairman with executive ability, knowledge of the tasks Congress entrusted to the agency and sufficient strength and independence to resist pressures from Congress, the executive branch, or the business community, which tends to cripple effective performance by the FTC.

Now, I am not raising a question of whether you think your own personal qualifications fulfill this criteria. That would be hitting below the belt and this is not my purpose. But, I am a little interested about these "pressures from Congress."

What are these pressures that you apprehend from Congress?

Mr. KIRKPATRICK. I think if I recollect what was intended there, sir, it was a question of personnel more than anything else. From time to time as I understand it, and I did not myself go into the details of this aspect of the report, it was felt that perhaps undue recognition was given to an applicant for employment, because he happened to be sponsored by a Senator or Congressman. That we felt was undesirable.

Senator COTTON. In other words, your understanding of what the study commission had in mind is patronage?

Mr. KIRKPATRICK. That is correct, sir.

Senator COTTON. I think it would be well to let the record show, as it has many times before, that despite the fact most of us feel these quasi-judicial Commissions have been created by acts of Congress and are actually creatures of the Congress, we have had a tendency to view with a little jealousy that they have come to be regarded as a part of the executive branch. This committee, for instance, has oversight duties with respect to several such agencies. However, while we do not want to stick our fingers into their independence and right of decision, we still don't like, as the years go on, to have them considered an adjunct of the executive branch.

What is your reaction to that?

Mr. KIRKPATRICK. My reaction is the Federal Trade Commission is an independent agency, a fully independent agency, in its adjudicatory functions.

With respect to its investigative function, I think section 6 of the Federal Trade Commission Act sets out that we should be substantially responsive both to the requirements and wishes of Congress and the White House with respect to studies, investigations, and reports, and that is set out rather specifically in the underlying legislation.

Senator COTTON. I would like the record to show one other thing, which I think it also has shown before. I was reassured by your statement that what the ABA study commission had in mind was the matter of Congressmen and Senators seeking to get their friends appointed to jobs, rather than something else. Now, it is my own practice and I think one now followed by most Members of Congress for our own protection, if for no other reason-that if a constituent wants me to approach a commission or commissioner in regard to any matter pending before it, then I do so by letter with copies to be furnished interested parties, unless the only purpose is to ask that something be expedited if possible, with no possible comments on the merits of the case. If haste dictates a telephone call, then I request of the member of the commission or such official as I do reach, that the call be monitored, with the assurance that I will confirm our conversation by letter. I think that is the only safe way for Members of Congress to deal with these commissions.

Is that your concept of what is the proper approach?

Mr. KIRKPATRICK. It strikes me as entirely proper, meticulously proper, sir.

Senator COTTON. Do you agree then that it is all right if it is merely a matter of seeking to expedite some pending matter?

Mr. KIRKPATRICK. Oh, certainly.

Senator COTTON. It could be done informally by telephone, as long as that is all it is. Nonetheless, in such matters I always confirm it by letter so the record shows that is all it was.

Mr. KIRKPATRICK. So long as, Senator, when we are unable to expedite it, you will be understanding, there is no problem.

Senator COTTON. You also understand if a constituent wants us to make such a request, then we make it even though it may not be possible to grant it.

The CHAIRMAN. Would you yield on that for a second?

Senator COTTON. Certainly.

The CHAIRMAN. I have, and I am sure other members of the committee have, instructed our staff to do as was suggested there for a long time, but we don't have any monitors in my office.

Do you have them at the Federal Trade Commission?

Mr. KIRKPATRICK. I don't know the answer to that.

The CHAIRMAN. Well, maybe you can find out.

Mr. KIRKPATRICK. Yes, sir. I simply don't know the answer. The CHAIRMAN. All right. I won't pursue that. Thank you. Senator COTTON. It is easy enough if the person calling requests it? Mr. KIRKPATRICK. I must assume if we said we are doing it, we have the facilities to do it. I am personally unacquainted with it.

Senator COTTON. All you have to do is have your secretary or stenographer monitor the call.

Mr. KIRKPATRICK. Oh, I was thinking of a recording device. I thought that is what you meant.

Senator COTTON. Well, yes, but that is not the only way you can monitor the conversation.

The CHAIRMAN. A letter is the best way. What I usually do is call up and say I am sending you a letter, you ought to get it tomorrow morning, and then you are through.

Senator COTTON. I think some of my colleagues have other questions regarding some of the matters that you have already addressed, but I have nothing further at the moment.

May I say that I join the chairman in expressing my approval and congratulate the President on offering so well qualified an appointee.

On some of the questions of philosophy I still want to reserve my own judgment, but insofar as your qualifications are concerned you give us reason to hope that the Federal Trade Commission will become a much more dynamic force. I think we are very fortunate in having you. Thank you.

The CHAIRMAN. Senator Pastore?

Senator PASTORE. Yes.

First of all, I agree with the chairman that I think the President should be congratulated for this nomination and certainly, Mr. Kirkpatrick, you have no trouble with the Senator from Rhode Island. But you know I am afraid that we are prone to fall in the habit of talking about consumer protection and then when it comes to specifics we don't seem to be as enthusiastic and as affirmative as we are in the cliches we use in speaking about these problems in a general fashion. I am afraid that part of that even falls within the report that you made.

On page 27 of your report you make a comparison between the amount of money that was spent by the Federal Trade Commission with reference to mergers, as against the amount of money that was used for the enforcement of the textile and the fur labeling aspect of your responsibilities.

Now I would like to ask you, why is that so? Why isn't it just as important to protect the consumer in making sure that what he buys is what it is labeled to be, rather than something that is a fraud upon that consumer? Why isn't that important?

Mr. KIRKPATRICK. I certainly would concede, sir, that that is important. I think it is a question of the relativities of the matter.