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For the Fiscal Year Ended
September 30, 1982

For sale by the Superintendent of Documents, U.S. Government
Printing Office
Washington, D.C. 20402

c. 2

DAVID A. CLANTON, Commissioner
PATRICIA P. BAILEY, Commissioner
GEORGE W. DOUGLAS, Commissioner
CAROL M. THOMAS, Secretary


Pennsylvania Avenue at Sixth Street, N.W.
Washington, D.C. 20580

Regional Offices
Atlanta, Georgia
Room 1000
1718 Peachtree Street, N.W.
Zip Code 30367

Denver, Colorado
Suite 2900
1405 Curtis Street
Zip Code 80202

Boston, Massachusetts
Room 1301
150 Causeway Street
Zip Code 02114

Los Angeles, California
Room 13209
11000 Wilshire Boulevard
Zip Code 90024

Chicago, Illinois
Suite 1437
55 East Monroe Street
Zip Code 60603

New York, New York
Room 2243-EB Federal Building
26 Federal Plaza
Zip Code 10278

Cleveland, Ohio
Suite 500 - Mall Building
118 St. Clair Avenue
Zip. Code 44114

San Francisco, California
Room 12470 - Federal Building
450 Golden Gate Avenue
Zip Code 94102

Dallas, Texas
8303 Elmbrook Drive
Zip Code 75247

Seattle, Washington
Room 2840 - Federal Building
915 Second Avenue
Zip Code 98174
Field Station

Honolulu, Hawaii
Room 6324
300 Ala Moana Blvd.
Zip Code 96850



Washington, D.C.
To the Congress of the United States:

It is a pleasure to transmit the sixty-eighth Annual Report of the Federal Trade Commission
covering its accomplishments during the fiscal year ended September 30, 1982.
By direction of the Commission.




Table of Contents
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Maintaining Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary of Enforcement Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Distribution Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Case Generation Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Integration of Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Oil Industry Merger Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Horizontal Merger Enforcement Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competition Advocacy in Steel Dumping Cases . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Advertising Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Credit Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Service Industry Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Marketing Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Office of Consumer and Business Education . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Impact Evaluation Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Consumer Advocacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Economic Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Regional Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Executive Direction, Administration and Management . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Part II (Investigative Stage) Consent Agreements Accepted
and Published for Public Comment
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Part II (Investigative Stage) Consent Agreements Issued in
Final Form

Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22


Preliminary Injunctions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Civil Penalty Actions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Administrative Complaints
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Part III (Adjudicative Stage) Consent Agreements Accepted
and Published for Public Comment
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Part III (Adjudicative Stage) Consent Agreements Issued in
Final Form
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Initial Decisions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Final Commission Orders
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Consumer Redress Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Order Modifications

Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Enforcement Policy Statements and Advisory Opinions . . . . . . . . . . . . . . . . . . . . . . . . . 49
Appellate Court Review of Commission Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Supreme Court Review of Commission Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Economic Working Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Interventions Before Other Federal and State Agencies . . . . . . . . . . . . . . . . . . . . . . . . . 57
Miscellaneous Economic Policy Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Line of Business Program Research Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63


Fiscal 1982 was a year of change for the Commission. With the appointment of Chairman
James C. Miller III, the Commission undertook a restructuring of priorities and management policy
for the agency.
While the Commission continued its commitment in carrying forward its statutory
responsibilities, it also pursued three major goals:


During fiscal 1982, the Commission placed a high priority on improving the management
of the agency. To this end, a reorganization plan was developed and implemented to maximize the
utilization of agency resources. The reorganization established direct lines of authority from
professional staff to senior managers, increased accountability of senior managers to the
Commission, consolidated overlapping and duplicative programs, and reduced the top-heavy
management structure. The Bureau of Economics' reorganization enhanced its ability to provide
support for the agency's law enforcement missions and to provide advice on economic matters to the
Commission more effectively. The Commission's information resources were consolidated from
different sources into a single office headed by a new Deputy Executive Director. This new office
will offer a coherent and comprehensive information resource for the Commission, the Commission's
staff, and the public.


During fiscal 1982, the Commission strengthened the effectiveness and efficiency of the
agency's law enforcement activities. More emphasis was placed on the prosecution of cases and less
on the development of new rules. The staff also has been directed to focus its activities on cases
involving fraud, price-fixing, and other more traditional law violations.

In an effort to improve the effectiveness of the Commission's law enforcement program, the
Commission has successfully integrated economic analysis into all aspects of the Commission's
planning, case selection, rule analysis, and prosecution of cases. Integration of economic analysis
at all steps in the decisions-making process has focused staff resources on the most promising cases,
i.e., those with real potential for consumer or competitive benefits, thereby making the most efficient
use of the taxpayer's investment.




In recent years, the Commission's relations with Congress and the public had taken on an
overly adversarial tone. Growing Congressional and public criticism over the Commission's
directions were reflected in the 1980 FTC Improvements Act, which restricted the agency's law
enforcement activities in certain areas and forbade them altogether in others.
The Commission has worked toward continually improving its relationship with Congress
and the public. The agency's Office of Congressional Relations was upgraded and new lines of
communication were opened with private groups interested in or affected by the FTC's activities.
Outreach programs were expanded to include business education projects to encourage voluntary
compliance with laws and rules administered by the FTC.
The organization of the Commission is divided into three bureaus which carry out the
Congress' two mandates maintaining competition in the marketplace and protecting the consumer.
The following is a summary of the Federal Trade Commission's accomplishments in fiscal 1982.
The mission of the Commission's Bureau of Competition is to enhance the welfare of
consumers by maintaining the competitive operation of our economic system of private enterprise.
The Bureau carries out its mission by enforcing the antitrust provisions of the Clayton Act and the
Federal Trade Commission Act, as well as by serving as a vigorous advocate of competition before
Congress and other governmental bodies.
In fiscal year 1982, several organizational changes were made in the Bureau to improve its
management and make it more effective in achieving the goals of the FTC Act. These include
restructuring the "Deputy Director" position to allocate responsibility for each of the Bureau's
litigating units to a particular Deputy Director, allowing each Deputy to maintain day-to-day contact
with the segment of Bureau activities under his or her supervision. In addition, responsibility for
regional office competition activities was shifted into the Office of the Director. Further, in response
to the scarcity of enforcement resources, attorneys were reassigned to make a higher proportion of
them available for direct law enforcement efforts.
During fiscal 1982, the Commission initiated 160 investigations of possible violations of the
antitrust laws. Many of the investigations pur-



sued possible multiple law violations, totaling 289 possible violations in all. The Commission issued
two administrative complaints, accepted eight consent agreements and voted to seek three
preliminary injunctions relating to competition matters. The U.S. Courts of Appeals issued decisions
in three appeals of Commission decisions, and an evenly divided Supreme Court allowed one
challenged Commission order to stand.
Energy Mergers. Substantial resources were focused on mergers and acquisitions, and
several of the largest were in the petroleum industry. During the year, the Bureau was called upon
to investigate the second and third largest mergers in U.S. history. In the intended purchase by Mobil
Corp. of Marathon Oil Co., and subsequently, in the proposed acquisition of Cities Service by Gulf
Oil Co., the Bureau devoted extensive resources to providing the Commission with the necessary
factual and legal analysis to determine their likely competitive effects. In both cases, the
Commission determined that the acquisitions might have resulted in a lessening of competition in
the production and distribution of various petroleum products, and voted to seek injunctions in
federal court to stop the mergers. In both cases the proposed mergers were abandoned.
Other Mergers. In a third large merger case, LTV Corp. sought to acquire Grumman Corp.
Based upon the Bureau's investigation, the Commission found that the acquisition could result in a
lessening of competition in the carrier-based military aircraft market, and voted to seek an injunction
against the acquisition. This proposed acquisition was also abandoned.
Two merger investigations resulted in the issuance of formal complaints. B. F. Goodrich
sought to acquire certain properties of Diamond Shamrock used to produce polyvinyl chloride. The
Commission issued a complaint alleging that the merger could reduce competition in this market.
The Hospital Corp. of America acquired two hospital chains in the Chattanooga, Tenn., area. Again,
the Commission issued a complaint, charging that patients might have fewer alternatives and pay
higher prices as a result of the merger. These cases are now in litigation before administrative law
Six merger cases during the year resulted in either consent agreements accepted for public
comment or consent agreements approved in final form. The largest of these was the acquisition by
ConAgra Inc. of Peavey Corp., where the Commission required substantial divestiture of grain
milling facilities in several Western states before approving the proposed transaction. Consent
decrees from Batus Inc., and Canada Cement LaFarge Ltd. were accepted and consent agreements
with Gifford-Hill American Inc. and General Electric Co., were issued in final form. The
Commission also granted final acceptance to an order requiring the



divestiture by Lehigh Portland Cement Co. of its Hannibal, Mo., cement making facility. The
divestiture resulted from settlement of charges in the Commission's 1981 complaint that Lehigh's
acquisition of U.S. Steel's cement-producing Universal Atlas Division would substantially reduce
competition in the manufacture and sale of portland cement in the Midwest.
The Commission also maintained an effective presence in the enforcement of antitrust
prohibitions against distribution restraints which cause injury to consumers, including vertical
restraints and violations of Robinson-Patman prohibitions against price discrimination. In a final
decision, the Commission reversed a 1981 finding by an administrative law judge and held that
Russell Stover Candies Inc. had violated the antitrust laws by coercing retailers to sell candy at
"suggested" retail prices with threats to terminate dealers who failed to comply. Germaine Monteil
Cosmetiques Corp. agreed to a consent order, and an order was issued in final form against Onkyo
U.S.A. Corp. prohibiting resale price maintenance. In addition, new initial phase investigations were
opened concerning some 23 possible Robinson-Patman violations and 47 possibly illegal vertical
The Commission has devoted major resources to an effort to detect and prosecute antitrust
violations in the health-care industry, which accounts for nearly 10 percent of the nation's gross
national product. During fiscal 1982, the Texas Dental Association agreed to an order prohibiting
it from obstructing insurance companies' efforts to minimize dental care costs. The Commission also
issued a complaint against Hospital Corp. of America (discussed above), charging that its acquisition
of two hospital chains in Chattanooga would reduce competition in the provision of health care
services in that city.
The health care effort also resulted in Commission acceptance of two consent orders
prohibiting professional organizations from interfering with competition by means of truthful
advertising. In a consent order issued in final form, the Broward County Medical Society was
required to abandon restrictions on its members' advertising, including advertising by physicians that
they accepted Medicaid or spoke Spanish, and the Association of Independent Dentists also agreed
to a consent order prohibiting interference with truthful advertising. Finally, an evenly divided
Supreme Court upheld without written opinion a Commission order prohibiting the American
Medical Association from interfering with truthful advertising by its members.



In addition to continuing the present level of effort in ongoing enforcement initiatives, several
new and complementary approaches to case generation were implemented to foster competition and
increase consumer welfare. First, the Bureau instituted a one-month intensive project, enlisting the
efforts of attorneys: from all of the Bureau's divisions, to identify promising areas for investigation
and evaluate case generation techniques. Second, the Bureau carried out a cooperative effort with
the Bureau of Economics to target industries for investigation which, based on an analysis of
economic data, appeared likely to have a significant probability of collusion or market power.
Finally, increased emphasis was given to case generation activity as an element of the Bureau's
ongoing workload. These new approaches have resulted in an enhanced ability to identify and
investigate competitive trouble-spots in the economy.
In accordance with the Commission's stated desire to increase the integration of economic
analysis into the agency's activities, the Bureau has increasingly evaluated its competition activities
from an economic perspective. In particular, the Bureau has taken steps to obtain and incorporate
the comments of the Commission's Bureau of Economics at every important stage of case
development. Economists sit on the Bureau's merger screening and evaluation committees and also
have input prior to the initiation of preliminary and full-phase investigations. An economic advisor
now assists the Director in each major decision, and works with other attorneys within the Bureau
as well. Also, a course in legal principles for economists and courses and specialized colloquia on
economics for lawyers have enhanced understanding and increased communication between lawyers
and economists. Evaluative discussions and written analysis in the Bureau clearly reflect this effort.
Following the proposed acquisition of Marathon Oil Co. by Mobil, Congress asked the
Commission to perform an intensive study of merger activity in the petroleum industry. A joint
effort by the Bureaus of Competition and Economics produced a comprehensive analysis, using data
sources derived by the Commission over the course of its ten-year investigation of the petroleum
industry in the Exxon case, information provided by the Department of Energy, and information
from Hart-Scott-Rodino premerger filing by the parties to recent large mergers in the petroleum
industry, notably the Mobil-Marathon and Gulf-Cities Service acquisition attempts.



The study analyzed the degree of concentration and possibilities for anticompetitive
restrictions at all stages of petroleum production, including exploration, refining, transportation and
marketing. The Commission also analyzed the motives behind merger activity in the petroleum
industry, concluding that tax considerations, efficiencies in production and management, and
differing valuations for crude oil reserves were the dominant causes. In the bid for Marathon
common stock by both U.S. Steel and Mobil, for instance, it was estimated that over 25 percent of
the premium paid for Marathon would be recouped in tax savings to the company which succeeded
in acquiring it.
The Commission concluded that present law was adequate to protect against the possible
anticompetitive effects of mergers in the petroleum industry, as the Commission's action against
several petroleum mergers during the past year had shown. A proposed complete ban on mergers,
which the Commission had been asked to comment on, would have prevented certain mergers whose
beneficial aspects, such as improved development of secondary sources of oil, outweighed any
harms. The Commission instead recommended continued careful scrutiny of merger activity in the
petroleum industry under laws currently in force.
During the past fiscal year, the Commission completed work initiated by then-Acting
Chairman David Clanton to prepare a statement of Commission policy in the area of horizontal
mergers. The FTC statement was released on the same day the Department of Justice announced an
updated version of its 1968 guidelines. The guidelines were intended to make clear which factors
the FTC would consider important in reviewing horizontal mergers and acquisitions.
The Commission's statement emphasizes the qualitative factors involved in determining
whether a merger is anticompetitive; for example, whether there are conditions facilitating tacit
collusion, and whether market power would be likely to be exercised given alternative product
choices available to consumers and alternative manufacturers of the product in question. While
giving considerable weight to the justice guidelines so as to provide general parameters to business,
the Commission statement makes clear that no single set of quantitative measures, particularly
measurements based on market shares, can substitute for careful analysis of the likely competitive
effects of a merger.
The statement also, for the first time, identified those considerations that would determine
how the Commission would exercise its prosecutorial discretion within the limits imposed by the
law itself. One important clarification involved the failing company doctrine. The Commission
noted that evidence of individual firm performance can be of use in evaluating the probable effect
of a merger. Additionally, the Com-



mission observed that some mergers can bring about efficiencies in production and management, and
that it is appropriate to consider such efficiencies in deciding how to exercise the agency's discretion.
It is anticipated that the enforcement statement will make the Commission's enforcement effort more
predictable and enhance businessmen's understanding of the Commission's enforcement policy.
In a joint effort, the Bureaus of Competition and Economics undertook a thorough analysis
of various aspects of steel dumping cases pending before the Department of Commerce and the
International Trade Commission. Bureau representatives filed comments and participated in
hearings to emphasize the possible adverse impacts on consumers and competition that could result
from the imposition of dumping penalties on imported steel. The Commission was the sole U.S.
government agency formally representing the interests of American consumers at the hearings. The
Commission did not take a position either for or against particular remedies which had been
proposed, but instead emphasized the effects the proposed sanctions would have upon competition
in sectors of the American economy other than the steel industry.
The Consumer Protection Mission seeks to eliminate unfair or deceptive acts or practices
with emphasis on those practices that may unreasonably restrict or inhibit the free exercise of
consumer choice. The Bureau emphasizes market-oriented remedies for law violations, and its
mission is carried out through five divisions: Advertising Practices; Credit Practices; Service
Industry Practices; Marketing Practices; and Enforcement. In addition, the Bureau has an Office of
Consumer Education, an Impact Evaluation Unit, and a Consumer Advocacy program.
The Advertising Practices division focuses on the elimination of false and deceptive
During fiscal year 1982, the Commission gave final approval to several consent agreements
in this area. For example, the Tomy Corp. agreed not to represent in its advertising that its doll
houses and accessories are sold in sets when, in fact, accessories are priced separately. D'ArcyMacManus and Masius Advertising Inc., the advertising agency for Snug Denture Cushions agreed
to conform advertisements for the product to health warnings appearing on its label. Under an



with American Motors Corp., new jeep CJ models will carry stickers warning prospective buyers that
the vehicles handle differently than ordinary passenger cars.
Many of the agreements approved concern dissemination of energy-related information. For
example, two companies, Great North American Industries Inc. and Ball-Matic Corp. Inc., agreed
to discontinue allegedly misleading advertising concerning fuel economy improvement claims for
their products. The Renuzit Home Products Co. agreed to test its motor oil to ensure that it is
properly labeled and classified. Two leading manufacturers of vinyl siding, Mastic Corp. and Vinyl
Improvement Products Co., agreed not to make energy savings claims about their products.
The Commission published the periodic cigarette report listing the tar, nicotine, and carbon
monoxide content of 200 varieties of cigarettes. The FTC contributed comments to the Department
of Energy concerning possible consumer protection and competition problems of public utilities in
connection with the Residential Conservation Service Program.
The Credit Practices decision unit enforces legislation addressing problems in the consumer
credit market.
The Commission obtained civil penalty judgments in five credit-related matters. Collegiate
Recovery and Credit Assistance Programs Inc. (CRI) agreed to pay $32,500 in civil penalties to settle
FTC charges concerning violations of the Fair Debt Collection Practices Act.
The nation's two largest car rental companies agreed to pay civil penalties settling charges
that each failed to include a provision concerning consumer rights in contracts financing the sale of
cars formerly in their rental fleets. Hertz Corp. will pay a $70,000 civil penalty, and Avis Rent-ACar System Inc. agreed to pay a $30,000 civil penalty and also prepare and distribute public service
announcements on consumer rights under the Holder-In-Due-Course Rule.
To settle charges that it violated the Equal Credit Opportunity Act (ECOA), Beall's
Department Stores Inc. agreed to pay $10,000 in civil penalties and send applicants rejected since
July 1978 a package including an ECOA notice, a request form to obtain a new application, and
specific reasons for credit denial. To settle charges that it had violated the Fair Credit Reporting Act
(FCRA) and the Equal Credit Opportunity Act, Lender Service Inc. agreed to pay $10,000 in civil
penalties, review all applicants rejected since August 1978, send required ECOA and FCRA notices,
and give reasons for past denial of credit.



The FTC has also filed a complaint requesting civil penalties against Iowa Credit Syndicate
of Ft. Dodge Inc. for alleged violations of the Fair Debt Collection Act.
In the debt collection area, the Commission gave final approval to a consent agreement with
Aldens Inc., the nation's fifth largest mail order firm. Aldens agreed not to contact third parties in
attempts to collect delinquent accounts. The Commission also obtained a preliminary injunction
against the Bureau of Collections and its owner to prevent violations of the Fair Debt Collection
Practices Act.
The Commission submitted comments to the Federal Reserve Board (FRB) on proposals
dealing with credit related regulations. FTC staff comments concerned: proposed interpretations of
Regulation B relating to credit scoring systems; proposed updates of the official FRB staff
commentary on Regulation Z; proposals concerning preemption of state laws under the Truth-InLending Act (TILA), and Maine's exemption from the TILA.
The Service Industry Practices decision unit deals with unfair, deceptive, or anticompetitive
practices in the service industries.
The Commission filed suit in federal district court seeking a permanent injunction against
International Diamond Corp. (IDC), the nation's largest investment diamond company. The FTC
complaint charges IDC with misrepresenting the risks associated with diamond investment. IDC and
a former official of the company agreed to the terms of the FTC's proposed injunction. In addition,
the IDC complaint seeks refunds for investors injured by the allegedly deceptive practices and
cancellation of their contracts. The court granted the permanent injunction, but the consumer redress
issues are still pending.
Another investment firm, the American Diamond Co., signed a consent agreement in which
it agreed to stop making allegedly deceptive claims that gems can be sold as easily as stocks and at
a generally recognized market price.
In the transportation area, the Commission testified before the Senate Commerce Committee
on the subject of intercity bus deregulation (H. R. 3663). The Commission advocated substantial
deregulation on grounds that industry deregulation would result in greater price and service options.
The Commission also filed a rulemaking petition with the Interstate Commerce Commission (ICC)
asking that the ICC reduce entry barriers and rate controls over motor contract carriers.
The Commission filed an amicus curiae brief in Harris v. North Carolina Board of Certified
Public Accountant Examiners. The brief addressed two questions: whether an interpretation of a rule
of professional ethics and conduct adopted by the N.C. Board, limiting the



operations of branch offices of CPA firms, unreasonably restricts competition with local firms; and
whether the Board's status as a state regulatory body exempts it from application of the antitrust laws.
In the product standards area, the Commission (jointly with the Department of Justice) filed
an amicus curiae brief in the Supreme Court in American Society of Mechanical Engineers v.
Hydrolevel Corp. The case involved the question of a competitor's manipulation of the standards
process to block an innovative product from entering the market. The brief argued that a standards
organization should be held liable under the antitrust laws for failing to control the anticompetitive
conduct of its agents. The Court upheld liability on the theories and reasoning urged in the brief.
The Office of Management & Budget (OMB) granted the Commission clearance for the
proposed Funeral Rule. The Commission approved the rule, which requires itemized price
disclosure and prohibits misrepresenting legal and cemetery requirements, and sent it to Congress
for approval as required by the 1980 FTC Improvements Act.
The Marketing Practices decision unit monitors sales and marketing practices and
investigates companies allegedly using unfair or deceptive practices at the time of sale. The division
also polices warranty practices.
A major area of attention in this program is the vacation timesharing industry. Activities in
this area include liaison with the industry to advise members of FTC concerns and to encourage full
compliance with the laws the Commission administers. A consumer education effort for potential
timeshare buyers has been undertaken. A popular consumer newsletter presenting ten timeshare
"tips" is part of this effort. The Commission obtained a stipulated injunction against Paradise Palms
Vacation Club prohibiting misrepresentations in timeshare sales. Other law enforcement activities
in this area also continue.
In the deceptive sales practices area, the Commission modified provisions of a 1978 order
concerning the use of business cards and advertising disclosures by Grolier Inc., an encyclopedia
publisher and distributor. Refund checks totaling $1.47 million were mailed to former Bell &
Howell correspondence school students resulting from the settlement of a 1977 FTC complaint. The
Commission filed a complaint in federal district court against another correspondence school,
LaSalle Extension University. This action seeks redress for former LaSalle students in connection
with course cancellation procedures. In addition, the Commission is seeking to enjoin National
Transportation Consultants Inc. and others from making further misrepresentations and omissions
of material facts in marketing truck driver training courses. The Commission is also seeking
consumer redress in this case.



In the product information area, the Commission gave final approval to three consent
agreements. The American Honda Motor Co. Inc. agreed to repair or replace rusted front fenders
on qualifying 1975-1978 Honda cars. The Chrysler Corp. agreed to provide 700,000 owners of
1971-1980 Japanese-made Chrysler cars and trucks with accurate information on the need to use
special replacement oil filters to avoid engine damage. Under an agreement with Volkswagen of
America, approximately 400,000 owners of 1977-1981 diesel Volkswagens and Audis were notified
of oil filter installation procedures, and offered reimbursement for engine damage caused by oil filter
An administrative law judge issued an initial decision upholding FTC charges in the
International Harvester Co. litigation. The administrative law judge ruled that the company knew
or should have known by 1963 that certain of its gasoline-powered tractors were subject to a fire
hazard, but did not institute an "effective" operator notification program until 1980. The judge did
not, however, enter an order against International Harvester. This decision is on appeal to the
The warranties program deals with the comprehensibility and
availability of warranty information, as well as with warranty performance.
The Commission issued an administrative complaint against R.E. Ward Corp., a major
Washington, D.C., area home builder, charging it with a substantial pattern of warranty abuses that
led to costly buyer injury. This is the first administrative complaint issued under the FTC's Housing
Program, involving the warranty performance of builders across the country.
The Commission gave final approval to a consent agreement with Worthington Ford of
Alaska Inc. and three associated used car dealerships. The dealers agreed to inform former
customers of previously undisclosed warranty coverage on their vehicles. The agreement also
requires the dealers to give new customers warranty information before a sale.
Chairman Miller has proposed a revised version of the Used Car Rule that Congress vetoed
in fiscal year 1982. The Chairman's proposed rule would clarify dealer responsibilities and consumer
rights by, among other things, requiring disclosure of warranty information.
The Enforcement decision unit monitors compliance with Commission orders and guides,
and most rules and statutes.
In total, as of September 30, 1982, the FTC has obtained $537,500 in civil penalties for
violations of previously issued orders, or for violations of FTC rules. Up to another $44,550,305
may be obtained by consumers in redress resulting from cases concluded in fiscal year 1982.



In addition to the matters mentioned previously, the following companies have been assessed
civil penalties: Ivy International, a wool importer, $25,000; RJR Foods Inc., the maker of Hawaiian
Punch, $70,000; Womack Nursery Co., a mail order plant company, $10,000; National Dynamics,
a mail order firm, $100,000; Van Schaack & Co., a real estate company, $30,000; Starcrest Products
of California Inc., a mail order firm, $50,000; and R.J. Reynolds Co., a cigarettes producer,
The Supreme Court left intact a $1.75 million fine against Reader's Digest for violating a
1971 FTC order. The company distributed misleading contest materials similar to those which
resulted in the issuance of the original order.
A women's clothing and enamel giftware franchisor, Enamelcraft Inc., agreed to a permanent
injunction. Under the injunction, Enamelcraft agreed to comply with the FTC's Franchise Rule and
not to misrepresent the services and merchandise it offers. The Commission also obtained a
permanent injunction against Marketing Associates Inc. from misrepresenting video game business
opportunities in violation of the Franchise Rule.
A consent judgment filed by the FTC requires West Branch Ltd., a bankrupt mail-order firm,
or its president to set up a fund to ensure refunds to customers who paid for, but did not receive,
merchandise offered by the company.
An amicus curiae brief was filed in U.S. District Court involving SMM Mail Order
Marketing Inc., a mail order firm. The brief described the Mail Order Rule, and suggested that the
court allow the company to ship paid orders and return new orders.
The Commission filed a complaint in U.S. District Court seeking civil penalties and
permanent injunctions against Hosiery Corp. of America, for alleged violations of the Mail Order
Rule, the Unordered Merchandise Sec. 205 Synopsis, and postal regulations.
The Commission modified three previously issued FTC orders: a 1978 order with Charles
E. Boone and Cooga Mooga Inc.; a 1973 order with Credit Card Services Corp; and a 1982 order
with Litton Industries Inc. A Commission advisory opinion will allow Paccar Inc. to designate the
same year for all trucks in a fleet when production straddles changeover of a model year.
The Commission approved proposed amendments to the Care Labeling Rule clarifying the
language of required instructions.
Tentative partial exemption for the R-Value (Insulation) Rule for cellusose insulation
manufacturers was revoked after the Commission accepted public comments. The Commission
issued a temporary partial stay of parts of the Rule applicable to new home sellers pending the
receipt of public comments. In addition, the Commission approved a proposal to put into effect
requirements for measuring thick insulation samples and to lift the stay on this section of the rule.



The Commission also sought public comment on proposed guidelines designed to assist
creditors under existing Commission orders in complying with revisions to the Truth-In-Lending Act
and its implementing rules. FTC staff prepared and released to the public a booklet entitled Civil
Penalties: A Policy Review Session. Its general purpose is to structure Commission discussion and
review of the role and determinants of civil penalties in the Consumer Protection Mission.
The Office of Consumer and Business Education coordinates an education program aimed
at providing information to consumers and industry on major Commission decisions, programs,
statutes, and rules. This allows informed choices and competitive business practices to function
freely in the marketplace.
In fiscal year 1982, three public service announcements were produced for television on
creative financing of home mortgages. In addition, a public service announcement campaign is being
developed for radio concerning used car sales.
Other consumer business education activities include the publication of various brochures,
booklets, and fact sheets. For example, the Commission produced material for business on "Buying
By Phone," "How To Advertise Consumer Credit," and "Discounts for Cash." For consumers,
publications covered such subjects as timesharing, buying by mail, creative financing, and "bargain"
The Commission continued to assess the economic effects of its activities through various
studies coordinated by the Impact Evaluation Unit staff. Among the studies completed in fiscal year
1982 was a baseline and validation study on the proposed Funeral Rule, a baseline study of the Care
Labeling Amendment which was also a retrospective evaluation of the Care Labeling Rule, a survey
of mortgage bankers regarding the costs of Truth-In-Lending Act compliance, and a study of the
quality of contact lens fittings which will be incorporated into a FTC staff report.
Several studies were begun in fiscal year 1982 including Regulatory Flexibility Act studies
(small business impact) of the Mail Order Rule and the Pre-Sale Availability of Warranties Rule.
Follow-up impact studies were initiated on the Commission's Insulation (R-Value) Rule, Appliance
Energy Labeling Rule, and Pre-Sale Availability of Warranties Rule.
Through these studies, the FTC continues to adjust its plans and enforcement activities to
maximize consumer and business benefits at the least cost to all parties involved.



The Federal Trade Commission has long been aware that government initiatives, as well as
private action, may, in some cases, decrease competition and consumer welfare. Instances of
government action adverse to competition and consumer welfare come to the Commission's attention
in the course of investigatory and monitoring activities directed at private industry. Thus, in addition
to its rulemakings, cases, and other activities to remedy problems arising in the private sector, the
Commission has traditionally been active in supporting pro-competitive and proconsumer actions
by government agencies. A few of the Commission's fiscal year 1982 filings and testimony in which
the Bureau of Consumer Protection, as well as the Bureaus of Competition and Economics
participated are summarized below.
The FTC contributed joint bureau comments in response to requests from the Federal
Communications Commission on three separate occasions. The first set of staff comments dealt with
the costs involved in the current allocation system for new broadcast licenses, including delay,
uncertainty, and extensive legal fees. Staff concluded that as long as public interest considerations
were safeguarded via other guarantees, initial allocation by auction would efficiently distribute
licenses, with a lottery system viewed as second-best. The second set of comments examined the
so-called "three-year rule" which restricts resale of broadcast stations within that time. Staff analysis
indicated that elimination of this restriction could lead to more efficient use of broadcast assets, thus
helping to maximize consumer satisfaction by easing restraints on competition. The third set of
comments argued that there is great merit to allowing free market allocation of domestic satellite
transponder circuits. Such an approach could facilitate an increased capacity of the U.S. satellite
system, resulting in lower entry costs for satellite transmission and making the circuits available for
a wider array of programming services.
In response to requests at the state level, the Commission submitted a letter in opposition to
a bill that would have severely limited the freedom of auto dealers to locate in Delaware. This letter
pointed out the anti-consumer and anti-competitive effects likely to accrue from certain provisions
in the bill, and requested consideration for the FTC's concerns regarding the economic impact of the
bill. The bureaus of the Commission also jointly petitioned the Interstate Commerce Commission
to consider changing the rules affecting motor contract carriers, i.e., trucking companies that do
business under private contracts. The petition said that the proposals, if adopted, could lessen
discrimination against smaller shippers since contract carriers would no longer be deterred from
handling small accounts on a contract basis because of relatively high regulatorily-imposed costs.



Consumer Protection Bureau Director Timothy J. Muris testified before a House
subcommittee regarding the provision of telecommunications and information services by the federal
government in competition with the private sector. Muris concluded that the special conditions that
might justify government enterprise in these areas appeared to be absent.
The FTC's Bureau of Economics has three main responsibilities to provide economic support
to the agency's antitrust and consumer protection activities; to advise the Commission about the
impact of government regulation on competition; and to gather and analyze information on the
American economy.
The primary mission of the FTC is to enforce the antitrust and consumer protection laws.
In 1982, the Bureau of Economics continued to provide guidance and support to those activities. In
the antitrust area, economists offered advice on the economic merits of potential antitrust actions.
The primary function here was to distinguish situations where the marketplace performed reasonably
well from situations where consumer welfare might be augmented by Commission action. When
enforcement actions were initiated, economists worked to integrate economic analysis into the
proceeding and to devise remedies that would facilitate competition. In a new role, economists who
are not involved in the investigation or prosecution of cases also provided advice to the
Commissioners in matters at the adjudication stage.
In the consumer protection area, economists provided estimates of the benefits and costs of
alternative policy approaches. Potential consumer protection actions were evaluated not only for
their immediate impact, but also for their longer run effects on price and product variety. Bureau
economists provided internal advice on the competitive impact of various governmental laws,
regulation, and proposed trade rules. Using expertise derived from studies of various industries and
trade practices, economists helped to evaluate credit practices, advertising, product defects,
warranties, and a wide variety of other consumer protection
Although the FTC is primarily a law enforcement agency, it also collects, analyzes, and
publishes information about the nation's business firms. Much of this work is conducted by the
Bureau of Economics. In 1982, economists did research and statistical studies concerning a broad
array of topics in antitrust, consumer protection, and regulation.
In the antitrust area, economists released reports on mergers in the petroleum industry and
on deep seabed mining. In addition, economists studied the effectiveness of structural antitrust
remedies and analyzed theories regarding resale price maintenance and relevant market defini-



tion for antitrust purposes. Economists played an important part in analyses which resulted in the
Commission issuing, for the first time, its own statement of principles on merger guidelines. Finally,
numerous research projects using the Commission's Line of Business data were initiated, and several
papers were released; economists also began working on an extensive analysis of the benefits and
costs of the Line of Business program.
In the consumer protection area, work continued on studies of the effects of state drug
substitution laws, the impact of state advertising restrictions on the prices of legal services, and the
effects of the regulation of retail milk prices by states. New studies initiated, during 1982, included
research on consumer expectations in the market for automobiles, the effects of the Equal Credit
Opportunity Act, and the costs of complying with the Truth-in-Lending Act.
In the regulation area, economists participated in a program of commenting on the regulatory
activities of other federal and state agencies. In this regard, the Bureau of Economics was involved
in hearings before the International Trade Commission which addressed allegations by domestic steel
companies that foreign producers were selling steel below cost in the U.S. Economists have been
monitoring the activities of the International Air Transport Association which sets fares for
international passenger traffic. Comments were offered on the Interior Department's regulation
which prohibits joint bidding by major petroleum companies on outercontinental shelf oil leases.
Other activities included preparation of a report on the effects of the Interstate Commerce
Commission's deregulatory activity, and analyses of issues involving satellite transponders, cable
television ownership, travel agents, sugar quotas, product liability laws, railroad boxcars, electronic
funds transfer, contact lenses, airport landing slot allocations, and ocean shipping, to name a few.
Ongoing study projects in the Bureau cut across the various FTC missions. The year's
research agenda included topics such as grocery retailing concentration, regulations which restrict
the adoption of certain inventory valuation methods, for-profit hospitals, Securities and Exchange
Commission regulations, developing a protocol for experimental tests of oligopoly hypotheses,
various aspects of historical merger activity and enforcement guidelines, the economics of dual
antitrust law enforcement, and antitrust recidivism.
During fiscal 1982, the regional offices continued to play a substantial role in implementing
the policies and law enforcement responsibilities of the Commission. The regional offices, because
they are located in the areas they serve, have helped develop and carry out those law enforce-



ment activities best suited to the economic conditions of their areas. The regional offices helped to
monitor federal antitrust and consumer protection laws, provided important guidance and education
to businesses and consumers, and coordinated efforts with local and state law enforcement agencies.
The regional offices made significant contributions to the Commission's law enforcement
efforts. They were responsible for handling some of the more significant litigation and for achieving
some of the more important settlements during this fiscal year. In addition, the regional offices
handled tens of thousands of inquiries and complaints from consumers, businesses, and members
of Congress. These offices provided important law enforcement guidance and education to members
of the public, small business associations, and local interest groups of numerous types.
The Office of the Executive Director is responsible for executing Commission decisions and
providing overall administrative support for agency functions. The office also has primary
responsibility for the agency's regional operations which, in 1982, consisted of 10 regional offices
located in major cities across the United States.
Because 1982 was a year of transition, in terms of administration and resources, particular
emphasis was placed on providing support to the new administration and to managing activities with
fewer resources. During the year, the Office of the Executive Director was restructured to provide
specialized management of information along with the traditional areas of personnel, budget and
finance, administrative services and procurement. As a part of this reorganization, printing,
publishing and distribution functions were transferred from the Office of the Secretary to the
Executive Director, and a new organization, Planning and Information, was created within the Office
of the Executive Director to house all data processing, library and information functions.
The Office of the Executive Director coordinated the planning and implementation of
Commission decisions to restructure the agency's regional offices network. This activity, begun in
April 1982, and postponed in May 1982, was undertaken to improve the management of the regional
structure and to give better alignment of agency activities with national economic activity. Efforts
to improve further the effectiveness of the regional operations, included management sessions with
regional personnel and the development of a regional newsletter.
Fiscal 1982 appropriations were $2 million less than the previous year, and guidance to the
agency indicated that future budgets would be lower. Given this, the agency maintained a limited
hiring freeze and im-



plemented other management actions to monitor spending. A cost reduction program was
implemented that covered all areas of discretionary spending. In addition, reviews of agencyperformed services that could be contracted out were completed, and contracts were placed when
significant savings were achievable. Along with other steps taken to manage and reduce costs, the
agency began a review of internal control mechanisms where the focus was on vulnerability to waste,
fraud and abuse.
In a period of declining resources and transition, personnel management efforts were devoted
to maintaining employee morale and monitoring agency employment activities. The agency was in
its second full year of operation under the newly developed merit pay system.
The use of this program and the incentives provided for employees were being assessed.
Continued emphasis was placed on vital employee training and development programs.
The Commission's planning and budgeting process was used throughout the year to respond
to several new estimates of the fiscal 1982 budget, and special budget review sessions were held to
consider these proposals. Other management steps were taken to consolidate headquarters office
space and to utilize existing office space more efficiently.
As the Commission completed the year, all financial commitments had been met, and the
agency returned approximately $400,000 to the Treasury.

Part II (Investigative Stage)
Germaine Monteil Cosmetiques Corp.
A leading manufacturer of prestige cosmetics, fragrances, soaps and accessories was
prohibited from trying to set retail prices for its products. The complaint accompanying the
consent agreement alleges that Germaine Monteil established and maintained the resale prim
at which retailers advertised and sold its products. Under the agreement, Germaine Monteil
cannot take any action against retailers to retaliate for discounting, and is prohibited from
recommending suggested retail prices for two years in some of its product lines. During that
time, the company is required to print ads and promotional materials utilizing the prices
specified by the individual retailers. Thereafter, Monteil may suggest resale prices, provided
they stipulate that final resale price decisions are within the discretion of individual retailers.
Batus Inc.
Batus agreed to divest one of its retail department stores in the Milwaukee, Wisc. area. The
complaint accompanying the consent agreement alleges that Batus' acquisition of Marshall
Field & Co. violated antitrust laws because it eliminated competition between the two firms
in the Milwaukee area. Batus was the largest department store retailer in Milwaukee, while
Marshall Field was the eighth largest. The complaint also alleges that the merger reduced
competition in a highly concentrated market and discouraged possible market entrants.
Under the agreement, if Batus sells the Marshall Field store to comply with the order, Batus
must open or build another Marshall Field store within two years to preserve a wider range
of consumer choice by ensuring Marshall Field's continued presence in the market. In
addition, the agreement prohibits Batus from making further acquisitions of department
stores in the Milwaukee area without Commission approval.
ConAgra Inc.
ConAgra, a major U.S. grain miller, has agreed to divest several production and distribution
facilities in the western United States. The


complaint accompanying the consent agreement alleged that ConAgra's acquisition of Peavey
Co. eliminated competition in the manufacture and sale of bakery flour between the two
companies, and raised entry barriers in a concentrated market. The consent agreement
forbids future acquisitions of flour milling plants in the western states during the next ten
years without Commission approval.

Association of Independent Dentists
A group representing private practitioners in Pueblo County, Colorado, the Association of
Independent Dentists, agreed not to interfere with its members efforts to compete for
business through advertising. Under the terms of the consent agreement, the association is
also prohibited from threatening or otherwise coercing insurance companies to influence
their reimbursement rates to its members for services rendered. The complaint alleged that
the association's suppression of truthful advertisements had "restrained, frustrated, and
foreclosed competition" among its members and deprived consumers of necessary
Canada Cement Lafarge Ltd.
A major cement manufacturer, Canada Cement Lafarge Ltd. (CCL), agreed to divest one of
its cement plants as a result of charges that its acquisition of General Portland Inc. decreased
competition among cement companies in the southeastern U.S. by combining two direct
competitors in violation of the antitrust laws. The consent order required CCL to offer the
plants future buyer the opportunity to purchase distribution terminals and land over the next
five years. CCL is also required to provide the buyer with technical assistance, make 20,000
tons of cement available annually at commercially reasonable wholesale prices, and refrain
from acquisitions of cement manufacturing, grinding or distribution facilities in the target
market areas for 10 years without Commission approval.
Ogilvy & Mather
This advertising agency has agreed to cease advertising, directly or indirectly, that
Aspercreme contains aspirin.



Part II (Investigative Stage)
Gifford-Hill-American Inc.
Gifford-Hill-American Inc. agreed to divest a concrete pressure-pipe manufacturing plant to
offset alleged anticompetitive effects of Gifford Hill's acquisition of the Lock Joint Products
Division of Interpace Corp. The complaint accompanying the consent alleged that the merger
could increase concentration and substantially reduce competition or promote the creation
of a concrete pressure-pipe monopoly in the south central U.S. Gifford Hill is a leading
producer of concrete pipes and the largest in the south central U.S., while Lock Joint is the
largest producer of pressure-pipe in the nation. The consent agreement also bars Gifford
Hill, for ten years, from acquisitions of concrete pressure-pipe manufacturers without
Commission approval, and requires it to provide the purchaser of the divested plant with
technical advice.
General Electric Co.
Under the terms of this consent agreement, General Electric is required to sell its interest in
one of two companies producing computer aided design and manufacturing systems. GE will
divest all stock that it holds in Applicon, the nation's second largest producer of these
systems, and retain its interest in Calma Co., the nation's third largest producer. According
to a complaint issued with the agreement, GE's purchase of Calma, in December 1980, may
have violated antitrust laws by reducing actual and potential competition between Applicon,
Calma and other companies, increasing the percentage of the industry dominated by the top
companies, and discouraging potential market entrants.
Western General Dairies
This consent order requires Western General Dairies, a dairy cooperative, to offer nondiscriminatory prices and services to all of its raw milk and dairy customers, and to revise
its contracts so as to permit members to sell raw milk after leaving the association. The
cooperative sells and distributes raw milk to independent processors, and dairy products to
wholesale and retail customers. The complaint charged that Western General Dairies had
monopolized the supply of raw milk in Utah, Idaho, Wyoming and Colorado, and
monopolized distribution of dairy products in Utah and southeastern Idaho.



Onkyo U.S.A. Corp.
Onkyo agreed to a consent order which prohibits it from forcing stores to sell its audio
components at manufacturer-determined prices. The complaint accompanying the consent
charged that the company engaged in resale price maintenance, thereby reducing competition
among dealers. Onkyo agreed to inform its dealers that its suggested prices are only
guidelines and that they are free to set their own prices.
Broward County Medical Association
This consent agreement bars the Broward County Medical Association (BCMA), an
American Medical Association affiliate, from prohibiting truthful advertising by its
members. The complaint issued in conjunction with the agreement alleges that BCMA
restrained competition by declaring truthful advertising to be unethical, and by taking other
measures to prohibit its members from distributing information regarding their services and
fees. The agreement will permit BCMA to promulgate and enforce "reasonable ethical
guidelines" governing deceptive advertising.
Aldens Inc.
Aldens has agreed that in collecting debts it will not contact third parties, or any consumer
at any unusual or inconvenient time or place, or at the consumer's place of employment if the
employer prohibits such contacts unless the consumer consents.
Great North American Industries Inc.
This company has agreed to cease claiming that its engine oil additive will or may result in
substantial fuel economy improvement unless such claims are based on competent scientific
tests, and to send customers who purchased over 12 cans of the product copies of the consent
Ball-Matic Corp. Inc.
This company has agreed to cease claiming that its "automobile retrofit device" will result
in increased fuel economy unless such claims are based on competent scientific tests.



Worthington Ford of Alaska Inc.
This company has agreed to make written warranties available to potential buyers and to
honor implied warranties.
Tomy Corp.
In connection with the advertising, distribution and sale of any dollhouse, accessory, or other
toy product, this company has agreed to cease representing that any collection of products
is a set unless the depicted products can be purchased as a set.
Renuzit Home Products Co.
This company has agreed to substantiate the claims on the label of its motor oil by
conducting reliable tests and taking periodic samples.
American Honda Motor Co. Inc.
This company has agreed to notify owners of 1975-1978 Honda cars with rusted fenders that
the fenders can be repaired or replaced free of charge, and to reimburse owners for past
repairs to fenders.
D'Arcy-MacManus and Masius Inc.
This advertising agency has agreed not to claim that "Snug" denture product is for long-term
use. This product Is manufactured by Mentholatum and advertised by D'Arcy.
Chrysler Inc.
This company has agreed to notify owners of 1971-1980 Japanese-made Chrysler cars and
trucks that special strength replacement oil filters are necessary.
Mastic Corp.
This company has agreed not to pay for or disseminate any advertisement for vinyl siding
that contains an energy-related claim.
Vinyl Improvement Products Co.
This company has agreed not to pay for or disseminate any advertisement for vinyl siding
that contains an energy-related claim.



Volkswagen of America
This company has agreed to notify owners of 1977-1981 diesel Volkswagens and Audis
about how to install replacement oil filters properly and how they can receive reimbursement
for engine repairs caused by oil filter leaks.
American Motors Corp.
This company has agreed to place stickers on new jeep CJ models and send stickers to
current owners warning that the vehicles handle differently from ordinary passenger cars and
that sharp turns may cause the driver to lose control.
National Association of Scuba Diving Schools, Inc.
This association has agreed not to represent that any diving equipment or product bearing
their seal meets an objective standard of safety or reliability unless such equipment has been
competently and completely tested.
American Diamond Co. and Thomas L. Baker
This company and its president have agreed not to misrepresent the investment value of
gemstones and the past or potential appreciation of gemstones.



LTV Corp.
The Commission sought a preliminary injunction to prohibit LTV's proposed acquisition of
70 percent of the stock of Grumman Corp. The pleading charged that the acquisition would
violate the antitrust laws by reducing competition in the carrier-based aircraft industry. The
Commission argued that a preliminary injunction should be granted pending trial, because
if the acquisition was allowed to go forward and was later found unlawful, separating the
companies' assets would be difficult and would be likely to substantially weaken at least one
of the firms. The proposed acquisition was abandoned.
Mobil Corp.
The Commission sought a preliminary injunction against Mobil's proposed acquisition of
Marathon on grounds that the acquisition could substantially lessen competition in several
markets downstream from crude oil exploration and production. Marathon obtained an
injunction against the transaction in private litigation in the federal courts, which was upheld
on appeal by the Court of Appeals. In January 1982, the Supreme Court of the United States
refused Mobil's attempt to have these decisions reviewed. The proposed acquisition was
abandoned before the court acted on the Commission's suit.
Gulf Oil Corp.
The Commission sought a preliminary injunction barring Gulf Oil Corp.'s $5.13 billion
proposed acquisition of Cities Service, charging that the acquisition would substantially
increase concentration in the distribution of gasoline to service stations, production and
distribution of kerosene jet fuel, and transportation of petroleum products by pipeline. If the
acquisition were allowed, Gulf would have become the fourth largest gasoline marketer in
the U.S., increased its market share in the kerosene jet fuel market to over 17 percent, and
owned a 30.6 percent share in Colonial Pipeline, the primary petroleum pipeline from the
Gulf Coast to the New York City area. The Commission obtained a temporary restraining
order from the court and Gulf subsequently cancelled its takeover attempt.



Paradise Palms Vacation Club
This timeshare marketing company was enjoined from making false claims and
misrepresentations to buyers about the nature and location of vacation units and exchange
Don H. Sly - Bureau of Collections
Respondent was preliminarily enjoined from further violating the Fair Debt Collection
Practices Act. A subsequent contempt citation was obtained.
Enamelcraft Inc.
This company was enjoined from violations of the Franchise Rule and from misrepresenting
the availability of its product.



Foremost-McKesson Inc.
Foremost-McKesson agreed in a consent judgment to pay $175,000 civil penalty to settle
charges that its 1977 acquisition of Super Specials, Inc., a wholesale distributor of drug store
promotional merchandise including drugs, toiletries, housewares and sundries, violated a
1967 Commission order which required prior Commission approval of certain acquisitions.
According to the complaint, Foremost-McKesson violated an order requiring the company
to seek Commission approval before acquiring any firm engaged in the wholesale
distribution of drugs, drug proprietaries, druggists' sundries, toiletries, housewares or related
The Anaconda Co.
The Anaconda Co. agreed to a consent judgment providing for payment of $100,000 in civil
penalties to settle charges that it fixed prices of paper-insulated electric cable. The
Commission's complaint alleged that the company violated a 1936 consent order by
exchanging paper cable price lists with competitors, which had the effect of raising or
stabilizing prices. In addition, the order prohibits the company from conspiring with its
competitors to fix prices of paper cable, or exchanging information concerning prices, costs
or sale terms for the product. The company is also required to maintain records of any
discussions with competitors about paper cable transactions for the next 10 years.
CPC International
Six corn syrup processors agreed to an injunction that prohibits them from fixing prices or
exchanging price information in the sale of corn syrup. The Commission alleged that the
companies violated an outstanding 1950 order by exchanging price information in an effort
to coordinate price changes. Signing the order were CPC International, Inc., A.E. Staley
Manufacturing Co., Standard Brands, Inc., American Maize-Products Co., Anheuser-Busch
Inc., and The Hubinger Co. The consent decree was filed on behalf of the FTC by the Justice



Gulf Coast Builders Exchange
Gulf Coast Builders Exchange, an organization of Florida general contractors and
subcontractors, agreed to a consent judgment providing for the payment of a $30,000 civil
penalty to settle charges that it had imposed sanctions on members who dealt with nonmember contractors and subcontractors. The complaint charged the organization with
pressuring its members to deal exclusively with other members and maintaining a two-tier
fee system that resulted in imposing higher fees on members who dealt with non-members.
The judgment enjoins the organization from violating the provisions of the order in the
Ivy International
This company agreed to a $25,000 civil penalty consent decree for allegedly violating the
Wool Products Labeling Act.
RJR Foods
This company agreed to a $70,000 civil penalty consent decree for allegedly violating a 1973
Commission order involving the disclosure of fruit juice content in Hawaiian Punch.
Womack Nursery Co.
This company agreed to pay $10,000 in civil penalties and to set up a $35,000 fund to
provide refunds to consumers for allegedly violating the Mail Order Rule.
National Dynamics
This company agreed to a $100,000 civil penalty consent decree for allegedly violating a
1959 and 1976 Commission order concerning advertising claims about "VX-6" battery
Van Schaack & Co.
This company agreed to a $30,000 civil penalty consent decree for allegedly violating an
order requiring compliance with the Truth-in-Lending Act and Regulation Z.



Starcrest Products
This company agreed to pay $50,000 in civil penalties, and to notify former customers of
their eligibility for replacement merchandise or cash refunds, for allegedly violating the Mail
Order Rule.
R.J. Reynolds Tobacco Co.
This company agreed to a $100,000 civil penalty consent decree for allegedly violating a
1972 Commission order requiring clear and conspicuous lettering in disclosing the health
This company agreed to a $32,000 civil penalty consent decree for allegedly violating the
Fair Debt Collection Practices Act.
Hertz Corp.
This company agreed to a $70,000 civil penalty consent decree for allegedly violating the
Holder-in-Due-Course Rule.
Avis Rent-a-Car Systems Inc.
This company agreed to pay a $30,000 civil penalty for allegedly violating the Holder-inDue-Course Rule, and to prepare and distribute public service announcements about the rule.
Lender Service Inc.
This company agreed to pay $10,000 in civil penalties, review all applicants rejected since
August 1978, send the required ECOA and FCRA notices, and give reasons for denying
Beall's Department Stores Inc.
This company agreed to pay $10,000 in civil penalties, and send to applicants, rejected since
July 1978, a package which includes an ECOA notice, a request form to obtain a new credit
application, and specific reasons for credit denial.
Talent Inc.
This company agreed to refrain from violations of a 1974 Commission order concerning
misrepresentations in the advertising of phonograph records and song sheets. The

Commission did not request civil penalties.






B.F. Goodrich
The Commission charged that B.F. Goodrich's $131 million acquisition of the assets of
Diamond Shamrock Plastics Corp. would substantially lessen competition and increase
concentration in the production of polyvinyl chloride (PVC) and vinyl chloride monomer
(VCM) materials used to make plastics. If the Commission concludes that the acquisition
violated the law, Goodrich may be required to divest the Diamond Shamrock assets it
acquired and to refrain from acquiring stock or assets of other PVC or VCM companies
without the Commission's prior approval.
Hospital Corp. of America
The Commission charged that Hospital Corp. of America's 1981 acquisition of two hospital
chains in the Chattanooga, Tenn., area reduced competition in the provision of health
services in that area. According to the complaint, the nation's largest proprietary hospital
chain's acquisition of Hospital Affiliates International Inc. and Health Care Corp. may have
eliminated actual and potential competition and increased market concentration in both the
acute care and psychiatric hospital markets in Chattanooga. If the Commission finds that the
Hospital Corp. of America violated the law, it may order the company to divest facilities
acquired in the Chattanooga area, and to refrain from acquiring other competing facilities
without he Commission's prior approval.
Ward Corp.
The complaint charges Ward, a new home builder, with engaging in a pattern of warranty
abuses and other misrepresentations.






PART III (Adjudicative Stage)
Texas Dental Association
Under the terms of this consent agreement, the Texas Dental Association (TDA) may not
impede insurance companies efforts to minimize costs through the use of x-rays. Insurance
companies frequently request x-rays to evaluate planned treatment in order to limit their
benefits to the least expensive form of effective treatment. The complaint charged that the
TDA violated antitrust laws by inducing its members not to provide patient x-rays to the
insurers. The consent agreement requires the TDA to furnish a copy of the complaint, the
order, and an explanation of the order to current members and new members who join during
the next five years.






PART III (Adjudicative Stage)
Lehigh Portland Cement Co.
Lehigh Portland Cement Co. will divest its Hannibal, Mo., cement making facility in
compliance with this consent agreement. The complaint alleged that Lehigh's 1980
acquisition of U.S. Steel's Universal Atlas Division would violate antitrust laws by reducing
competition or tending to create a monopoly in the manufacture and sale of portland cement,
an ingredient in cement and concrete products, in the midwest. The FTC approved
Continental Cement Co., as the buyer of the divested plant and of several cement distribution
terminals owned by Lehigh.






General Foods Corp.
An administrative law judge dismissed the complaint against General Foods Corp., one of
the nation's two largest coffee makers. The complaint had charged that General Foods,
through its Maxwell House Division, used its dominant market position to frustrate the
growth of smaller coffee producers, limit entry into its markets and prevent competition in
the industry. The decision covers "regular" coffee, which includes all types except instant.
The judge ruled that General Food's conduct did not reveal an intent to use unfair methods
of competition or to monopolize the regular coffee market industry, but instead was
calculated to defend its market shares by meeting prices and promotions of Procter &
Gamble's Folger brand, and thus, was not unlawful.
Grand Union Co.
A decision by an administrative law judge ruled that the 1978 merger between Grand Union
Co. and Colonial Stores violated the antitrust laws. The complaint alleged that the merger
would lessen competition in the industry by eliminating Grand Union as a potential
competitor in certain southeast U.S. markets. The order requires Grand Union to divest its
interest in Colonial, within one year, to an acquirer approved by the Commission and to
obtain prior approval of acquisitions of any other company in the food retailing industry for
a period of 10 years.
BASF Wyandotte
An administrative law judge dismissed a complaint against BASF Wyandotte Corp., a New
Jersey subsidiary of BASF AG, a West German company. The Commission's complaint
charged that BASF Wyandotte's acquisition of Allegheny Ludlum International's Chemetron
Pigments Division would give BASF Wyandotte a market share in excess of 10 percent in
the organic pigment market. The judge found that the increase in concentration would not
threaten competition in an industry that has had significant over-capacity for some years and
has relatively low barriers to entry. Thus, despite the combined market share of 10 percent,
other factors demonstrated that market shares did not adequately describe the economic
characteristics of the industry.



Massachusetts Furniture & Piano Movers Association
In a decision rendered by an administrative law judge, the Massachusetts Furniture and Piano
Movers Association was found to have violated the antitrust laws by illegally conspiring to
fix rates in the moving industry in certain geographic areas. Massachusetts Furniture is an
association of some 300 common carriers representing 80 percent of the carriers certified by
the Massachusetts Department of Public Utilities to move household goods and office
furniture. The order requires the association, within three months, to cancel and withdraw
all tariffs (uniform rates for service agreed upon by competing movers and approved by state
regulators) which it has filed with the Massachusetts Department of Public Utilities.
Although joint tariffs are authorized by the Department of Public Utilities, the judge found
that they were not required by Massachusetts law, and neither the regulation authorizing joint
tariffs, nor administrative review for "reasonableness" were adequate grounds for exempting
the association from the federal antitrust laws.
International Harvester
An administrative law judge upheld a 1980 complaint that this company failed to disclose
to operators that their gasoline-powered tractors have a safety hazard of "fuel-geysering."
Southwest Sunsites Inc.
An administrative law judge dismissed a complaint which alleged that this company
misrepresented and unlawfully induced purchasers to make payments for land of "little or no



Kellogg Co.
The Commission vacated an initial decision and dismissed the 10 year old shared monopoly
case against the nation's largest ready-to-eat cereal manufacturers - Kellogg, General Mills
and General Foods. The complaints had alleged that, as a result of their conduct, the three
cereal producers shared monopoly power in the ready-to-eat cereal industry. The complaint,
which also alleged that the companies' advertising and marketing practices led to higher
cereal prices, was dismissed with prejudice determining that the case may not be brought
Beltone Electronics
The Commission overruled a 1980 FTC administrative law judge's decision and dismissed
a 1973 complaint against Beltone Electronics, one of the nation's largest hearing aid
manufacturers. The Commission ruled that Beltone's requirements that its dealers sell only
within assigned geographical territories and deal exclusively in Beltone's hearing aids did not
unreasonably restrain competition. The Commission concluded that there was not a
sufficient adverse effect on interbrand competition to justify challenging the restraint.
General Motors Corp.
The Commission dismissed a complaint which charged that General Motors' selective
distribution of crash-parts created a monopoly in the collision repair industry. General
Motors sells crash-parts, which are the body parts most commonly damaged in accidents,
exclusively through its franchised dealers. Independent body shops purchase the parts from
the General Motors dealers who resell them at a price higher than the price paid to GM. The
complaint, which was issued in 1976, charged that GM's distribution system disadvantaged
independent commercial body shops. The dismissal reverses an administrative law judge's
1979 ruling that found GM's "wholesale compensation plan," whereby a percentage of the
cost of crash parts sold to independent body shops is rebated by GM back to its dealers,
discriminated against those who compete with GM dealers in repairing crash-damaged
vehicles. The Commission concluded that while the competitive injury to the independent
body shops "barely" met the required legal showing of substantial injury to competition,


was offset by a showing of substantial business justification for the distribution system.

Times Mirror Co.
The Commission rejected a consent agreement it had provisionally accepted to settle charges
made in a 1977 complaint that Times Mirror discriminated in price among competing
retailers who purchased advertising space. The Commission dismissed the charges and
closed the case based on staff recommendations and public comment which suggested that
if it was made a model for antitrust enforcement throughout the industry, the agreement
might have imposed rigid structures and high compliance costs on newspapers in their
competition with other advertising media and had little beneficial effect on smaller
Exxon Corp.
The Commission dismissed a 1979 complaint challenging Exxon's proposed acquisition of
Reliance Electric Co. as anticompetitive. The complaint charged that the acquisition would
eliminate Exxon as a potential competitor in the electronic variable speed industrial drives
market. Exxon acquired Reliance, a major manufacturer of these drives, to market a new
technology called alternating current synthesis which was used to make the drives. The
efforts to develop this new technology were abandoned when Exxon realized that the new
technology did not have prospects for commercial exploitation. The Commission
subsequently accepted the Bureau of Competition's recommendation to dismiss the complaint
because Exxon no longer appeared to be a significant potential entrant as alleged in the
Russell Stover Candies Inc.
The Commission reversed a 1981 administrative law judges finding and held that Russell
Stover violated the antitrust laws by coercing retailers to sell candy at "suggested" retail
prices with threats to terminate dealers who failed to comply. The Commission's order
prohibited Russell Stover from taking action against retailers who sell below suggested retail
prices and to reinstate dealers terminated because they had discounted. In addition, the
company was required to pay for a survey of actual retail prices of its candy, and to refrain
from suggesting prices in the future if the survey shows more than 87 percent of the products
were sold at manufacturer-designated prices.



West Branch Ltd
This company has agreed to set up a $15,000 account to provide refunds to consumers for
undelivered merchandise to settle charges that it violated the Mail Order Rule.
General Development Corp. *
This company has agreed to give buyers the option of selling their lots back, changing the
location of their lots, using their lots as an exchange, or listing their lots for resale with a
subsidiary of the company at no charge.

General Development Corp. is in the process of purchasing the development from
AMREP Corp. which allegedly misrepresented the investment value of the land. This special
agreement with the Commission is not the result of an investigation of the company and is subject
to finalization of the purchase agreement between GDC and AMREP.






ABC Vending Corp.
The 1964 Commission order, among other things, prohibited respondent from (1) entering
theater concessioning contracts with a length of more than five years and (2) inducing or
receiving illegal price allowances. Ogden Food Service Corporation, a successor to the
original respondent, in 1981, petitioned the Commission to either set aside both order
provisions, or in the alternative, to eliminate the restriction on the length of its contracts.
Ogden said that market conditions had changed dramatically since the order was issued and
that it no longer possesses the dominant market position that allegedly enabled it to impose
anticompetitive contracts on motion picture exhibitors. Ogden also stated that because of
changed conditions concession contracts that were less than five years old were often
unprofitable, and the restraints imposed on it by the Commission's order thus threatened its
existence as a viable competitor. The Commission agreed, and it deleted the order provision
that involved contractual restraints. The Commission denied the petition with respect to the
inducing of illegal price discriminations stating that the order only required respondent to
comply with existing law.
Ash Grove Cement Co.
The order, among other things, required Ash Grove, which is a cement company to divest a
ready mix concrete company it had acquired. Ash Grove completed the divestiture, but
because it was forced to institute foreclosure proceedings against the acquirer, it reacquired
the divested assets. The order provided that in such a case, Ash Grove was to redivest the
assets. Ash Grove petitioned the Commission to delete these requirements from the order.
Ash Grove argued that changed economic conditions, specifically a depressed market, and
the acquired company's consequent poor financial condition, made it impossible for it to
divest the company. It requested that the Commission permit Ash Grove to retain the
company and attempt to restore it as an effective competitor. In granting Ash Grove's
request, the Commission determined that it would be in the public interest to allow Ash
Grove to retain the company and continue its operations.



Bayer AG
The order originally required Miles Laboratories, Inc., to divest the assets it used in
manufacturing and selling allergenic extracts. Miles twice petitioned the Commission to
modify the order to relieve it of the divestiture obligation. Miles argued that a proposed
change in regulations of the Food and Drug Administration (FDA) made it impossible for
Miles to obtain an acquirer for its allergenic extracts line because the proposal apparently
would ban Miles' most important allergenic extract products. Because FDA had not made
a final decision on the proposal and because Miles was then negotiating with a potential
acquirer, the Commission first only modified the order to grant Miles a one-year extension
of time within which to complete the divestiture. In granting Miles' second petition, the
Commission determined that as a result of the FDA proposal, Miles was unable to divest its
allergenic extracts business as a complete viable competitor.
Godfrey Co.
The consent order in this case originally required Godfrey to divest seven retail grocery
stores. Godfrey divested four of the seven stores, but in three separate petitions, requested
relief from the three remaining divestiture requirements, citing its inability to find acquirers.
The Commission granted Godfrey's petition and modified the order to relieve Godfrey of the
three remaining divestiture requirements.
Hammermill Paper Co.
The consent order with Hammermill prohibits resale price maintenance and also, prohibits
Hammermill from imposing customer restrictions on its dealers. Hammermill petitioned the
Commission to delete the order prohibition relating to customer restrictions. Hammermill
claimed that it had been unable to penetrate the market of small end users of copier paper and
that in order to penetrate this market, it needed flexibility in choosing the distribution
network it will implement - which includes the choice whether to impose customer
restrictions on its dealers. Hammermill asserted that modification of the order would be
procompetitive because its entry into the market would increase interbrand competition. The
Commission reopened and modified the order, but rather than delete the provision in
question, the Commission modified the provision to allow Hammermill to impose customer
restrictions on its dealers as long as doing so would not unreasonably restrain competition.



Hercules Incorporated
The order required a rope manufacturer, Columbian Rope Company, to obtain Commission
approval before acquiring any other rope manufacturer. Columbian petitioned the
Commission to relieve it of this obligation, citing changed market conditions. Columbian
argued that as a result of the changed conditions, the prior approval provision was
unnecessary and reduced both its flexibility in making procompetitive acquisitions and the
likelihood that it would be acquired in a transaction that promoted competition. In deciding
to grant Columbian's petition, the Commission determined that modification of this 11 year
old order was in the public interest.
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local
Union 959
This consent order basically prohibits respondent from entering into agreements that prevent
an employer from subcontracting work to firms that do not operate under the same terms and
conditions as govern the relationship between the Teamsters and the employer. A proviso
in the order, however, permitted the respondent to enter into such agreements if authorized
to do so by Section 8(e) of the National Labor Relations Act (NLRA) as long as one member
of the union was working at the relevant construction site. At the time the order was entered,
it was widely believed that such subcontracting clauses were unlawful if they pertained to
a construction site at which no union member is employed. Two Circuit Courts of Appeals
subsequently held that Section 8(e) of the NLRA permits the agreements in question whether
or not union and non-union workers are employed together at the relevant construction site.
Respondent then petitioned the Commission for modification of the order, citing changed
conditions of law. The Commission modified the order to delete the section that allowed
respondent to enter into the agreements only if one of the respondent's members is working
at the relevant construction site and conformed the order to the NLRA.
Lenox, Inc.
The Lexox order generally prohibits resale price maintenance and also includes a provision
prohibiting Lenox from preventing transshipping by its dealers. Lenox petitioned the
Commission to modify the order to delete this provision prohibiting Lenox from imposing
non-price related customer restrictions. Lenox said that the order's transshipping provision
no longer was necessary to ensure intrabrand price competition because of the order's other


against resale price maintenance and the existence of widespread discounting. However,
Lenox claimed that the prohibition of non-price customer restrictions significantly impeded
intrabrand competition by interfering with effective distribution of Lenox products; the
inability to prevent transshipping resulted in free-rider problems for Lenox dealers and
impaired the efforts by Lenox to foster the proper "prestige image" of its products; and that
Lenox was at a competitive disadvantage because its competitors are free to prevent
transshipping under the current law. The Commission modified the order to delete the
transshipping provision, but also added a provision making clear that Lenox cannot
discipline dealers who had transshipped Lenox products either before the order was modified
or before receiving notice that Lenox may restrict transshipping by its dealers.

National Dairy Products Corp.
The National Dairy order prohibits respondent from charging different prices to customers
at the same level of distribution. Kraftco, the successor to National Dairy, petitioned the
Commission to either vacate the order or modify it to prohibit Kraftco from charging
different prices to customers at the same level of distribution only when such price
differences would result in injury to competition. Kraftco stated that the order required it to
establish a uniform price, nationwide, for its fruit spreads, and prevented Kraftco from
experimenting with different marketing techniques. As a result, competition was adversely
affected because Kraftco, rather than being able to compete aggressively and initiate price
competition, could only react defensively to promotional price reductions by its competitors.
The Commission modified the order to provide that Kraftco could charge different prices to
customers at the same level of distribution, as long as the practice did not result in injury to
RSR Corp.
The Commission's order, which was affirmed on appeal, required RSR to divest three
secondary lead plants and other assets the Commission found to have been acquired in
violation of Section 7 of the Clayton Act. After one year, RSR petitioned the Commission
to relieve it of the divestiture requirements, citing RSR's inability to find an acquirer for the
plants. RSR subsequently agreed to a modification of the order that required RSR to divest
two secondary lead plants it owned before the acquisition, as a substitute for divestiture of
the acquired firm's assets. RSR also agreed to license certain technology to the acquirers.
The Commission then modified the order in accordance with that agreement.



Xerox Corp.
The complaint in this case charged Xerox with monopolizing the office copier market by
engaging in unlawful patent and marketing practices. The Commission order, in this case,
required Xerox, among other things, to grant at prescribed royalty rates, non-exclusive patent
licenses for office copiers and related products. In order for potential licensees to become
aware of this opportunity, the order required Xerox to publish a notice in the Official Gazette
of the United States Patent and Trademark Office. Xerox had to include in this notice a list
of all U.S. and foreign patents that Xerox is required by the order to license. Xerox
petitioned the Commission to modify the order to relieve it of the obligation to reprint the
list annually; Xerox requested that instead, the Commission only require it to announce the
availability of the patents and list only those patents issued since the preceding notice. Xerox
noted that repeat publications of the entire list (5,776 patents most recently) is costly and
because repeat publications is unnecessary, the cost cannot be justified. Additionally, the list
included expired patents, and the copier industry was already aware of the Xerox order. The
Commission granted Xerox's request that it annually publish only those patents not included
in a previously published list, together with a reference to previously published list. The
Commission also deleted a requirement that Xerox include in the notice a reference to a nowexpired provision of the order.
Cooga Mooga, Inc.
A petition by Charles E. Boone and Cooga Mooga, Inc., to modify a 1978 FTC order was
granted in part and denied in part. Under the modified order, Boone will no longer be
required to disclose any financial interest he may have in the products he endorses. The
request to suspend the requirement that Boone participate in a consumer refund program was
Miriam Maschek, Inc.
A petition by Francis Maschek to reopen and modify a 1975 FTC order was denied. The
petition claimed that the facial surgery covered by the order is now performed regularly by
physicians and thus should be considered safe and effective. The Commission determined
there was insufficient evidence to support any change in fact.



Credit Card Service Corp., et al.
A petition by the firm to modify a 1973 FTC order was granted in part and denied in part.
The Commission approved a wording change for a notice required in ads that alerts
consumers to the fact that they are protected from unauthorized use of their credit cards. The
Commission denied the request to drop John F. Ferry, Chairman of the CCSC Board of
Directors from the order.
American Home Products
A petition by C.T. Clyne Company, Inc., an advertising agency, to reopen the proceeding and
vacate the order entered against it was denied. The Commission denied the request on
grounds that it failed to show that changed conditions of fact or law required the order to be



Statement Concerning Horizontal Mergers
The Commission issued its first general policy statement concerning merger enforcement.
The statement emphasizes the factors the Commission will consider in assessing whether a
horizontal merger is anticompetitive and how those factors will be weighted. According to
the statement, market share data may not always measure the market power of merging firms
accurately, and therefore, other factors such as entry barriers, technological change, and
evidence of a failing division, or operating efficiencies should be considered to assess market
power effects. Consideration of such factors allows the Commission to evaluate overall
trends and reveals whether the market shares overstate the competitive impact of a merger.
The Commission also indicated that it would give "considerable weight" to merger guidelines
issued on the same day by the Justice Department when evaluating the effects of horizontal
Iowa Dental Association
The FTC issued an advisory opinion to the Iowa Dental Association stating that the peer
review plan proposed by the Association for resolving fee-related disputes, as set forth in
their letter requesting the Commission's opinion, would not violate the antitrust laws. The
Commission also suggested safeguards to ensure that the plan would not be used as a pricefixing mechanism in the future.
National Association of Stevedores
The Commission issued an advisory opinion to the National Association of Stevedores. The
opinion, based on the information furnished to the Commission by the Association, stated
that the FTC does not presently intend to commence enforcement proceedings against the
Association or its member companies if they make effective the "Code of Business Ethics
of the National Association of Stevedores," standards of policy with regard to lawful
competitive and business practices. The Commission also advised that if membership in the
Association were to become a valuable property right and competitive factor, certain actions
performed by the Association with respect to membership exclusion, suspension or
termination imposed without adequate procedural safeguards pursuant to the proposed ethical
code would be likely to raise enforcement concern.



Oil Merger Policy Statement
The Commission issued a report to Congress recommending against enactment of proposed
legislation that would impose a legislative ban on oil company mergers. Members of the
Senate and the House had asked the FTC to investigate the petroleum companies' recent
increase in merger activity. Although the Commission could find no single reason for the
increased activity, three possible influences on the industry were suggested: the rapid
escalation of crude oil prices, windfall profit tax and the corporate tax provisions enacted by
Congress. The Commission concluded that the recent large mergers in the industry had
neither a significant effect on concentration nor endangered competition and that a merger
ban could discourage the industry from exploiting opportunities for the development of
additional supplies of petroleum.



Borden Inc.
On February 24, 1982, the Court of Appeals for the Sixth Circuit affirmed the Commission's
decision and order, holding that the respondent manipulated prices in such a way as to
exclude equally efficient competitors from the reconstituted lemon juice market. Borden
petitioned for certiorari.
Equifax Inc.
On June 18, 1982, the Court of Appeals for the Eleventh Circuit set aside challenged
paragraphs of the Commission's order in Docket No. 8954, holding that the record did not
support the Commission's finding that Equifax's quality control audit procedures would
likely result in inaccurate information about consumers, and therefore violate the Fair Credit
Reporting Act.
H.R. Gibson, Sr. et al.
On August 13, 1982, the Court of Appeals for the Fifth Circuit affirmed and enforced the
Commission's order, holding, inter alia, that there was substantial evidence supporting the
Commission's findings of a group boycott and payments of illegal brokerage fees.
Litton Industries Inc.
On May 3, 1982, the Court of Appeals for the Ninth Circuit enforced, as modified, the
Commission's order, holding that it was within the allowable discretion of the Commission
to impose "all consumer products" coverage with respect to the order provision banning
deceptive use of surveys in advertising.
Sears, Roebuck & Co.
On May 6, 1982, the Court of Appeals for the Ninth Circuit affirmed the Commission's
order, holding that it was proper for the Commission to enter an order prohibiting certain
types of false and unsubstantiated advertising claims for various types of major home
appliances based upon evidence that Sears had engaged in an extensive campaign of false
and unsubstantiated advertising for dishwashers.



Tenneco Inc.
On September 16, 1982, the Court of Appeals for the Second Circuit set aside the
Commission order, in Docket No. 9097, holding that the evidence did not support the
Commission's findings that the acquisition by Tenneco of Monroe Auto Equipment Company
might substantially lessen competition in replacement automotive shock absorbers.



American Medical Association
On March 23, 1982, the Supreme Court affirmed the judgment of the Court of Appeals for
the Second Circuit by an equally divided Court. The Court of Appeals enforced as modified
the Commission's order requiring the American Medical Association to cease and desist from
regulating certain business aspects of the medical profession and to disaffiliate any
component medical society that fails to comply with the order.
Brunswick Corp.
On April 5, 1982, the Supreme Court denied Brunswick Corp.'s petition for a writ of
certiorari, thus letting stand the decision of the Court of Appeals for the Eighth Circuit,
upholding the Commission's determination that a joint venture between Brunswick and
Yamaha Motor Co. concerning the production and sale of outboard motors may substantially
lessen competition under Sec. 7 of the Clayton Act.






Structure-Profit Relationships at the Line of Business and Industry Level by David Ravenscraft,
March 1982.
Cycles in Nonrenewable Natural Resource Commodity Prices: An Analysis of the Frequency
Domain by Margaret Slade, March 1982.
Trends in Nonrenewable Natural Resource Commodity Prices: An Analysis of the Time Domain by
Margaret Slade, March 1982.
Dominant Firm Pricing and Byproduct Supply: The Structure of the U.S. Molybdenum Market by
Margaret Slade, March 1982.
The Role of Risk Aversion in the Allocation of Resources to Invention by Kenneth Kelly, March
Economic Issues in the Enforcement of the Equal Credit Opportunity Act by Samuel Myers, Jr.,
March 1982.
Rate of Return Regulation and Vertical Integration Under Uncertainty by Richard Rozek, March
Demand-Pull and Technological Innovation by F.M. Scherer, March 1982.
Inter-Industry Technology Flows and Productivity Growth by F.M. Scherer, March 1982.
The Risk Segmentation Hypothesis: A Reinterpretation of the Boczar Study by David Barton, March
Using Linked Patent and R&D Data to Measure Inter-Industry Technology Flows by F.M. Scherer,
March 1982.
Judo Economics, Entrant Advantages, and the Great Airline Coupon Wars by Judith Gelman and
Steven Salop, June 1982.
Entry, Market Shares, and Oligopolistic Performance by Daniel Alger, June 1982.
Spatial Competition Within an Optimal Control Framework by Mark Fratrick, June 1982.
Trends in Aggregate Concentration by Richard Duke, June 1982.



Mobility Among the 200 Largest Manufacturing Firms: 1948-1978 by Lawrence Rens, June 1982.
Defects in Disneyland: Quality Control as a Two-Part Tariff by A. Braverman, J.L. Gauch, and S.
Salop, June 1982,
A Review of the Economic Basis for Broad-Based Horizontal Merger Policy by Paul Pautler, June
Advertising Intensity, Market Share, Concentration and Degree of Cooperation by William Long,
June 1982.
Vertical Restraints and Economic Efficiency by Robert Steiner, June 1982.
Economic Efficiency of Liability Rules for Joint Torts with Uncertainty by Edward Golding,
September 1982.
Disclosure of Product Quality under Imperfect Information by Edward Golding, July 1982.
Warranties as Signals of Product Quality When Some Consumers Do Not Seek Redress by Edward
Golding, July 1982.
Product Differentiation and Imperfect Information: Policy Perspectives by Carl Shapiro, July 1982.
An Empirical Analysis of the Boston Consulting Group's Portfolio Model by Malcolm Coate,
August 1982.
An Experimental Test of the Consistent-Conjectures Hypothesis by Charles Holt, Jr., August 1982.
Practices That (Credibly) Facilitate Oligopolistic Coordination by Steven Salop, August 1982.



Motor Carrier-Ratemaking Study Commission
Testimony by James C. Miller III, "Antitrust Immunity for Collective Rulemaking in the
Motor Carrier Industry," before the Motor Carrier Ratemaking Study Commission. (11/8/81)
Federal Communications Commission
Federal Trade Commission joint bureau comments submitted in Federal Communications
Commission Gen. Dkt. No. 81-768, Selection of Initial Licensees Using Random Selection
or Lotteries Instead of Comparative Hearings. (12/20/81)
Interstate Commerce Commission
Federal Trade Commission joint bureau comments submitted in Interstate Commerce
Commission Ex Parte No. 346, Sub. No. 8, Regulation-Boxcar Traffic. (03/01/82)
Federal Communications Commission
Federal Trade Commission joint bureau comments submitted in Federal Communications
Commission BC Dkt. No. 81-897, Amendment of Section 73.3597 of the Commission's
Rules (Applications for Voluntary Assignments or Transfer of Control). (03/01/82)
Motor Carrier Ratemaking Study Commission
Comments of Dr. Denis A. Breen of the Bureau of Economics on "Regulatory Reform and
the Trucking Industry: An Evaluation of the Motor Carrier Act of 1980," submitted to the
Motor Carrier Ratemaking Study Commission. (03/04/82)
Federal Communications Commission
Federal Trade Commission joint bureau comments submitted in Federal Communications
Commission CC Dkt. No. 82-45, Domestic Fixed Satellite Transponder Sales. (04/16/82)



Interstate Commerce Commission
Federal Trade Commission joint bureau reply comments submitted in Interstate Commerce
Commission Ex Parte No. 346, Sub. No. 8, Exemption from Regulation-Boxcar Traffic.
International Trade Commission and Department of Commerce
Comments and briefs submitted on alleged subsidies and dumping of foreign steel in the
U.S., to the International Trade Commission and the Department of Commerce, May 27,
1982; July 21, 1982; July 26, 1982; July 28, 1982; August 11, 1982; August 27, 1982;
September 14, 1982. (05/28/82 - 09/14/82)
State of Delaware
Commission letter to the Delaware Development Office opposing a bill that would have
limited the freedom of auto dealers to locate in Delaware. (06/14/82)
Interstate Commerce Commission
Federal Trade Commission joint bureau comments submitted to the Interstate Commerce
Commission No. 38749, UTF Carriers, Inc., Petition for Exemption from Tariff Filing
Requirements. (06/28/82)
Office of Management and Budget
Federal Trade Commission joint bureau comments submitted to the Office of Management
and Budget on proposed Cable Telecommunications Act of 1982. (09/15/82)



Regulatory Reform and the Trucking Industry: An Evaluation of the Motor Carrier Act of 1980,
submitted to the Motor Carrier Ratemaking Study Commission, Denis Breen, March 1982.
According to the paper, the post-Motor Carrier Act experience provides a useful empirical
test of alternative rationales for trucking regulation. It reports that available evidence on
market structure, conduct and performance in the less-regulated environment does not lend
support to the market failure arguments for regulation; the evidence suggests instead that
regulation has served primarily to suppress competition in trucking. The paper concludes
that these findings, together with the problems that have arisen in attempting to implement
a statute that provides for piecemeal and gradual changes, indicate the need for further
regulatory reform.
Antitrust and Price Competition in the Trucking Industry, The Antitrust Bulletin, Denis Breen,
The paper notes that two antitrust issues have arisen over pricing practices in the lessregulated trucking industry: First, how will antitrust liability change with respect to collective
ratemaking activities; Second, is there a need for antitrust oversight by the Interstate
Commerce Commission of individual-carrier pricing practices to prevent predation and rate
discrimination? The first part of the paper explains why antitrust liability for collective
ratemaking is likely to increase and what difficulties this poses for antitrust compliance. The
paper then proceeds to consider allegations of anticompetitive behavior, but finds that
procompetitive pricing initiatives by individual carriers are being mischaracterized as actions
that destroy competition. According to the paper, these findings cast considerable doubt on
the need for the ICC to serve as a surrogate antitrust enforcer.
Competition and Health Planning, Judith Gelman, April 1982.
This paper, which is aimed at non-economists, examines the opportunities for introducing
competition in the heavily-regulated health care sector. Complications - such as costly or
inaccessible information, quality concerns, entry and exit barriers, and the existence of
natural monopolies - are discussed. Current regulations and their efficacy in achieving their
goals are examined. Finally, the paper contains questions that must be answered in
conducting a market analysis.



Efficiency Considerations in Merger Enforcement, Yale Law Journal, Alan Fisher and Robert Lande,
The role that efficiency considerations should play in merger enforcement policy is analyzed
by assessing congressional intent, econometric and case-study evidence, and theoretical
properties of the welfare trade-off between improved efficiency and increased market power
attributable to mergers, A benefit-cost model is developed to critique alternative enforcement
policy options and to provide a basis for recommending changes in current merger
enforcement consideration of efficiencies.
An Economic Analysis of Vertical Merger Enforcement Policy, Alan Fisher and Richard Sciacca,
March 1982
This paper combines a review of the economics literature on vertical integration and vertical
mergers with consideration of legal and political constraints in formulating realistic vertical
merger enforcement guidelines. Particular attention is given to recent advances in the theory
of vertical integration. Economically rational enforcement guidelines consistent with these
advances and with the costs and benefits of alternative enforcement efforts are proposed.
A Guide to the Herfindahl Index for Antitrust Attorneys, Paul Pautler, August 1982.
This paper presents the Herfindahl Index and its characteristics in a simple format. Several
numerical examples are used to explicate the characteristics of the index and to indicate how
it compares with use of a four-firm concentration ratio as a summary measure of market
structure. In addition, some discussion of the usefulness of any summary market structure
measure in merger guidelines is included.
Mergers in the Petroleum Industry, Bureau of Economics and Bureau of Competition Staff,
September 1982.
This report presents statistics on the domestic merger activity of the largest U.S. oil
companies over the period 1971-1981. The study compares the merger activity of a sample
of large companies not having substantial oil-related assets. It indicates an increase in large
oil company merger activity during 1979-1981 when compared with the period 1971-1981.
The study also shows a higher rate of merger activity for the large oil companies than the
sample of large companies



having no oil-related interests. The study also examines the likely effects of the petroleum
industry mergers on crude oil extraction, refining, transportation and marketing. According
to the report, merger activity of the large oil companies has not significantly altered
competitive relationships within any of these segments.
The Random Character of Merger Activity, William Shughart and Robert Tollison, May 1982.
The report observes that it is commonly accepted that merger activity has historically
occurred in "waves." Nevertheless, according to the paper despite the wide endorsement of
this proposition, the simple fact is that the "wave" hypothesis has not been tested heretofore.
This paper reports the results from time series analyses of acquisition statistics. Using annual
U.S. merger data covering the period 1895-1979 and observations on firm disappearances
in British manufacturing during the years 1880 to 1918, the authors report that they were
unable to reject the hypothesis that merger levels are generated by a white noise process. The
empirical findings imply that the economy-wide diffusion of efficient-firm-size-augmenting
innovation does not occur in a systematic pattern. According to the paper, it is concluded
that public policy concern with merger trends is unwarranted.
A Welfare Defense of the "Failing Company" Doctrine. William Shughart and Robert Tollison, May
Judicial precedent allows an otherwise illegal merger to escape injunction if one of the
parties can demonstrate that it would fail in the absence of the proposed takeover. In this
paper, an economic defense is provided of the so-called failing company doctrine. A model
was developed showing that the output restriction will be smaller and the welfare loss
corresponding less if the failed company's assets are acquired by an industry insider than if
those resources are dispersed by a bankruptcy proceeding. The authors conclude that the
defense should be applied expeditiously without protracted searches for the "least
anticompetitive" buyer and that mergers between failed firms and their former rivals should
go through with minimal delay.
Antitrust Recidivism in Federal Trade Commission Data: 1915-1982, William Shughart and Robert
Tollison, August 1982.
In this paper, an analysis is made of data about cases involving firms who repeatedly violate
the laws enforced by the FTC. It is found that approximately 23 percent of the law
enforcement actions brought by


the Commission involve repeat offenders. An illustrative sample of the characteristics of
recidivist cases includes: the majority of repeat offenses involved violations of Sec. 5 of the
FTC Act, nine percent concerned infractions of the Robinson-Patman Act, and relatively few
were brought under antimerger laws; over half of the repeat violations involved advertising
violations; and recidivism was most prevalent among firms in the apparel and accessories
industry. The available evidence was found to be more consistent with the hypothesis that
recidivism is due to the presence of law enforcement institutions and bureaucratic incentives
that make it less costly for the Commission to challenge the practices of repeat offenders,
rather than arising from the behavior of the firms themselves.

Dual Enforcement of the Antitrust Laws, Richard Higgins, William Shughart, and Robert Tollison,
September 1982.
In this paper, a model was developed which shows that independent dual enforcement leads
to more antitrust activity at a lower unit cost than would be obtained with a single agency.
On the other hand, the paper states that if the agencies collude, as they appear to do under
present institutional arrangements, dual enforcement leads to less and more costly antitrust
activity than would otherwise result. According to the paper, empirical tests using historical
agency budget and case production figures do not refute the models main predictions. It
concludes that more enforcement activity would be obtained at a lower unit cost if the 1948
FTC-Justice liaison agreement were abandoned.
Antitrust Over the Business Cycle, Ryan Amacher, Richard Higgins, William Shughart, and Robert
Tollison, September 1982.
According to this paper, two broad and venerable hypotheses can be deduced from the
literature about collusion, antitrust, and economic activity. These are that both private
collusive agreements and producer protection regulation should vary inversely with the
business cycle. This paper gives evidence which supports both contentions. Employing data
on general antitrust law enforcement activity and complaints charging violations of the
Robinson-Patman Act, strong counter-cyclical tendencies are found in collusion and
governmental regulatory intervention.



The Effects of Inter-Firm Cooperation and Economies of Scale on Product-Improving Research and
Development Expenditures by William Long.
Collusion, Rivalry, Scale Economies and Line of Business Profitability by John Kwoka and David
Modeling Profitability at the Line of Business Level by Stephen Martin.
Market, Firm, and Economic Performance: An Empirical Analysis by Stephen Martin.
On the Profitability of Wholesale Trade by Stephen Martin.
Aggregation and Studies of Industrial Profitability by Stephen Martin and David Ravenscraft.
Profitability and the Cost of Capital by George Pascoe and John Scott.
Structure-Profits Relationships at the Line of Business and Industry Levels by David Ravenscraft.
Transfer Pricing and Profitability by David Ravenscraft.
Concentration, Regulation, R&D, and Productivity Change by F.M. Scherer.
Technological Change and the Modern Corporation by F.M. Scherer.
The Propensity to Patent by F.M. Scherer.
The Effects of Conglomerate Mergers on Profits and Growth by Leonard Weiss.
Extent and Permanence of Market Dominance by Leonard Weiss and George Pascoe.
Adjusted Concentration Ratios in Manufacturing 1972 by Leonard Weiss and George Pascoe.
The Size of Selling Costs by Leonard Weiss, George Pascoe, and Stephen Martin.