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Annual
Report
of the
FEDERAL
TRADE
COMMISSION

For the Fiscal Year Ended
September 30, 1983

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

FEDERAL TRADE COMMISSION

JAMES C. MILLER III, Chairman
DAVID A. CLANTON, Commissioner
MICHAEL PERTSCHUK, Commissioner
PATRICIA P. BAILEY, Commissioner
GEORGE W. DOUGLAS, Commissioner
EMILY H. ROCK, Secretary

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EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION
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

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LETTER OF TRANSMITTAL

May 10, 1984

FEDERAL TRADE COMMISSION
Washington, D.C.

To the Congress of the United States:

It is a pleasure to transmit the sixty-ninth Annual Report of the Federal Trade Commission covering its
accomplishments during the fiscal year ended September 30, 1983.
By direction of the Commission.

JAMES C. MILLER III
Chairman

THE PRESIDENT OF THE SENATE
THE SPEAKER OF THE HOUSE OF REPRESENTATIVES

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FEDERAL TRADE COMMISSION
1983 ANNUAL REPORT
Table of Contents
Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Maintaining Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Summary of Enforcement Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Horizontal Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Order Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Competition Advocacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Advertising Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Credit Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Marketing Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Service Industry Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Policy and Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Office of Consumer and Business Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Economic Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Regional Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Executive Direction, Administration and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Appendix
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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Preliminary Injunctions
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Civil Penalty Actions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Administrative Complaints
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Part III (Adjudicative Stage) Consent Agreements Accepted
and Published for Public Comment
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Part III (Adjudicative Stage) Consent Agreements Issued in
Final Form
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Initial Decisions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Final Commission Orders
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Order Modifications
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Advisory Opinions
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Appellate Court Review of Commission Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supreme Court Review of Commission Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic Working Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous Economic Policy Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Line of Business Program Research Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
vi

65
67
69
77
79
81

SUMMARY
Fiscal 1983 was a year of continued progress toward assuring the Commission its proper role as an
effective and responsible law enforcement agency.
While the Commission continued its commitment in carrying forward its statutory responsibilities, it also
pursued four major goals:
I.

IMPROVED RESOURCE ALLOCATION

The Federal Trade Commission Act authorizes the Commission to bring complaints against those thought
to be violating the law when that would be in the interest of the public. That admonition - to act in the public
interest - combined with the usual responsibility of a law enforcement agency to exercise its prosecutorial
discretion in an intelligent manner, means that the Commission must be careful to allocate its law enforcement
resources to those matters that will be of most benefit to the public.
To accomplish this objective, the staff has been instructed to be mindful in case selection that one of the
major purposes for which the Commission was created was to provide economic expertise in assessing the
impact of various commercial and business practices.
In the Maintaining Competition Mission, economics has taught us that consumers are harmed most when
competing sellers restrain competition among themselves. Therefore, the Commission has emphasized such
horizontal restraints, and our efforts are now producing significant benefits.
In the Consumer Protection Mission, Commission efforts have been directed at specific abuses that
threaten or cause harm to consumers. The staples of our enforcement program are fraud, deceptive advertising,
systematic breach of contract, and enforcement of Commission rules and other statutes.
II. REDUCE ADVERSARIAL POSTURE/IMPROVE COOPERATION
During fiscal 1983, the Commission created a new and beneficial atmosphere for all people affected by
its policies. The Commission invited consumer groups to share their ideas. Potential litigants were invited
to discuss and resolve their problems. The Commission also encouraged those in the commercial sector to ask
for advice in order to prevent avoidable problems, and such advice has been given on many occasions.

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FEDERAL TRADE COMMISSION

III. IMPROVED MANAGEMENT
The Commission's efforts to improve the management of the agency - to make its work more effective and
reduce waste - have progressed significantly during fiscal 1983. The Commission has reduced the number of
independent entities within the bureaus and clarified lines of authority. The Commission has made sure that
the agency's lawyers and economists work closely at each stage of litigation.
The Commission also unanimously voted changes in its procedures to speed decision-making at the highest
levels of the Commission and thus make the agency more effective.
IV. UNDERSTANDABLE POLICIES AND CRITERIA
During fiscal 1983, the Commission has attempted to provide those subject to and protected by its rules
a greater measure of predictability about the Commission's enforcement criteria and policies.
Accordingly, the Commission has issued its statement on deception, articulating its interpretation of the
law and explaining its enforcement policy.
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 1983.
MAINTAINING COMPETITION MISSION
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.
SUMMARY OF ENFORCEMENT ACTIVITIES
During fiscal 1983, the Commission initiated 171 initial phase and 34 full phase investigations of possible
violations of the antitrust laws. The Commission issued 1 administrative complaint, accepted 13 consent
agreements, and issued 9 advisory opinions relating to competition matters. The United States Court of
Appeals for the Eighth Circuit issued a decision in an appeal of a Commission decision, and the Supreme Court
declined to hear one challenge to a Commission order, and remanded another to the Commission for entry of
an agreed-to order.

ANNUAL REPORT 1983

3

HEALTH CARE
During fiscal 1983, Congress rebuffed efforts by some health care providers to strip the Commission of
its jurisdiction over the health care professions. Following policies established in prior administrations, the
Commission continued to devote major resources to an effort to detect and prosecute antitrust violations in
this industry, which accounts for nearly 10 percent of the gross national product.
Of particular importance were efforts in the area of advertising by health professionals. The Commission
published a proposed consent order against the Washington, D.C. Dermatological Society, and issued final
consent orders against the Association of Independent Dentists and the Michigan Association of Osteopathic
Physicians and Surgeons which prohibit them from interfering with truthful advertising by their members.
These important cases follow the Commission's decision in the American Medical Association case, upheld
by the Supreme Court in fiscal year 1982, which ruled that the AMA's restrictions on truthful advertising by
physicians
violated the antitrust laws.
The Commission reviewed a variety of activities by health care professionals relating to cost-containment
and other policies of medical insurers. The Commission upheld a decision by an Administrative Law Judge
that the Michigan State Medical Society had conspired to boycott cost-containment and reimbursement policies
of insurers. The Commission's order bans the Michigan State Medical Society from participating in boycotts
of insurers or entering into agreements with its members to regulate the amount or terms of reimbursement for
physician services. The Commission also ruled that Indiana Federation of Dentists violated the antitrust laws
when it agreed with its members and others to obstruct cost-control efforts of insurers by collectively refusing
to submit existing x-rays for insurance company evaluation, and the Texas Dental Association agreed to a
similar order. State Volunteer Mutual Insurance Co., Inc., a physician-owned medical malpractice insurance
company, agreed not to discriminate against physicians who supervise self-employed nurse-midwives.
In recognition of the health care industry's need for guidance in this evolving area, the Commission issued
several advisory opinions relating to health care issues. An advisory opinion to the American Academy of
Opthamology by the Commission reviewed the professional society's code of ethics and cautioned against
possible misuse of several of its rules.
A Commission advisory opinion to the Rhode Island Professional Standards Review Organization and a
staff advisory to the American Podiatry Association examined peer review programs. A form of preferred
provider organization, designed to finance and deliver health care services of a limited number of
professionals, was found likely to be procompetitive

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FEDERAL TRADE COMMISSION

in a Commission advisory opinion to Health Care Management Associates. Finally, the Commission advised
Burnham Hospital that an exclusive contract under which a group of radiologists operated the hospital's
radiology laboratory would be lawful if the contract was made in the interest of the hospital, and was not the
result of efforts by the medical staff to restrict competition among physicians.
HORIZONTAL RESTRAINTS
Antitrust enforcement activity during fiscal 1983 reflected an increasing emphasis on prohibiting
agreements between competitors which injure competition. Although such agreements have been the subject
of numerous investigations in the health care area, they are also an increasingly important focus in non-health
care cases.
During 1983, the Commission upheld an Administrative Law Judge's ruling that the Massachusetts
Furniture and Piano Movers Association had unlawfully conspired to set rates and restrain competition in
Massachusetts' moving industry. The Order prohibits the Association from engaging in any collective rate
making activities. In the Ethyl case, the Commission upheld in part a 1981 Administrative Law Judge's
decision that Ethyl Corporation's and E. I. dupont de Nemours & Co.'s use of certain "facilitating practices",
such as advance price announcements, uniform pricing and "most favored nation" clauses restrained price
competition. The Commission also upheld a finding that it was unlawful for two individuals to serve as
directors of Borg-Warner Corporation, Robert Bosch GmBH, and its American subsidiary, Robert Bosch
Corporation. All three companies were competitors in the sale of ignition parts, wire and cable products and
carburetor tune-up kits for foreign cars.
Consent agreements were obtained from Great Dane Distributors Council and Dillon Companies, Inc.
Great Dane Distributors Council, an association composed of dealers of Great Dane Trailers, Inc., agreed not
to impose territorial or customer restrictions among its members. Under a separate agreement, Great Dane
Trailers Inc., a truck manufacturer, is prohibited from assisting the dealer organization in restraining
competition among its members. Dillon Companies, a Kansas grocery retailer, was prohibited from interfering
with an independent firm's collection and publication of comparative price surveys based on items checked
in Dillon's stores. Dillon was prohibited from interfering with the collection of comparative grocery price data.
Civil penalties were also a part of the Commission's horizontal restraints program. The Joseph Dixon
Crucible Company agreed to pay $600,000 to settle charges that it violated a Commission cease and desist
order by participating in a price fixing conspiracy. Binney & Smith, Inc., Milton Bradley Co., and American
Art Clay Co. agreed to pay $1.25 million to

ANNUAL REPORT 1983

5

settle charges that they participated in a price-fixing conspiracy in the art materials industry during the period
between 1972 and 1979. The money will be paid to an escrow account, from which consumers, primarily state
school boards, will be refunded overcharges.
Finally, substantial case generation efforts were undertaken during 1983 to develop additional horizontal
restraints cases. These efforts will be reflected in the Commission's caseload in coming years.
MERGERS AND ACQUISITIONS
Mergers and acquisitions remained an important focus of antitrust enforcement review. Under the
provisions of the Hart-Scott-Rodino Act, businesses filed 1,971 submissions for 1,093 merger and acquisition
transactions during the fiscal year. Thirteen of the transactions resulted in the issuance of requests for
additional information.
An Administrative Law Judge ordered American Medical International, Inc. to divest French Hospital in
San Luis Obispo, California, because he concluded the hospital's acquisition had reduced price competition
and eliminated nonprice competition among area hospitals. The Commission also filed a complaint against
Schlumberger Limited alleging that its acquisition of Accutest Corporation could give it monopoly power in
the market for automatic computer test equipment.
Nine companies agreed to divest assets to settle antitrust charges. In high technology fields, Xidex
Corporation, the nation's leading manufacturer of duplicating microfilm, agreed to license microfilm
technology to settle charges that its acquisitions of two microfilm businesses reduced competition in the
industry. Allied Corporation, a leading supplier of chemicals to the electronics industry, agreed to divest a
subsidiary which produced high-purity acids used by the semiconductor industry and in laboratories. Under
the agreement Allied must license its patents and know-how relating to manufacturing and packaging highpurity acids to the purchaser for 10 years.
ConAgra, Inc. agreed to divest several flour production and distribution facilities in western states, and
Flowers Industries, Inc. agreed to sell bakery plants in Gadsden, Alabama and High Point, North Carolina.
Canada Cement Lafarge, Ltd., a major cement manufacturer, agreed to sell a cement plant and Jim Walter
Corporation agreed to divest four asphalt roofing plants. Batus, Inc. agreed to divest a department store in
Milwaukee, and Coca-Cola Company agreed to divest Doric Foods, a leading competitor in the chilled fruit
drink market. Finally, Gulf & Western Industries undertook to sell its Alabama manufacturing facility for
burial caskets to settle charges that its acquisition of two other manufacturers would reduce competition in
casket markets.

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FEDERAL TRADE COMMISSION

ORDER MODIFICATIONS
Responding to the FTC Improvements Act of 1980, which emphasized the importance of modifying
Commission orders when required by circumstances or the public interest, the agency modified 17 of its prior
orders during 1983. The modifications fell into three major categories:
Nine orders involving non-price vertical restraints were modified to reflect changes in the
caselaw which have followed from the Supreme Court's 1977 holding in GTE Sylvania that
per se analysis was inappropriate for such restraints.
Four orders imposing bans on mergers and acquisitions without Commission approval were
modified to recognize changes in industry structure over time.
Two orders imposing notification requirements were modified to permit less burdensome
alternatives.
In addition, the duration of an order resulting from charges of reciprocal dealing was limited to 10 years,
and an order in a monopolization case was modified to ease restrictions on advertising and promotion.
COMPETITION ADVOCACY
Working with the Bureaus of Consumer Protection and Economics, the Bureau of Competition engaged
in advocacy or prepared Commission presentations before Congress and government agencies in selected
circumstances. These activities were calculated to achieve the same goals as the Bureau's enforcement actions
- ensuring that consumers enjoy the benefits of a competitive marketplace. Indeed, most of these
"interventions" were done either at Congressional request, or as an outgrowth of an investigation to see
whether particular practices violated Section 5 of the FTC Act.
The Commission and its staff intervened in several proceedings before the Interstate Commerce
Commission to urge reliance on competitive markets rather than regulation. In ICC Ex Parte No. 346, Bureau
of Competition staff argued in favor of deregulation of boxcar traffic, and in Ex Parte MC-165, the
Commission staff urged easing of administrative entry barriers for contract trucking.
The agency was also active in competition advocacy concerning other transportation markets. In testimony
before the Subcommittee on Monopolies and Commercial Law of the House Judiciary Committee, Chairman
Miller addressed anticompetitive conduct by shipping conferences permitted by the Shipping Act of 1982.
Chairman Miller also testified before the Aviation Subcommittee of the House Committee on Public Works
and Transportation, on behalf of the Commission, oppos-

ANNUAL REPORT 1983

7

ing adoption of the Air Travelers Security Act of 1983, a bill that would have allowed the airline and travel
agent industries to limit certain types of marketing arrangements in the sale of air travel.
Several comments were filed in international trade proceedings. A brief filed with the International Trade
Commission in Certain Softwood Lumber Products took the position that stumpage fees charged to lumber
companies by the Canadian government were not so low as to constitute a subsidy for the purposes of a
countervailing duty petition. In a dumping case, the Commission filed a brief concerning the definition of the
boundaries of the domestic Color Television market for the purposes of determining injury to domestic
producers. In the Court of International Trade, the Commission filed a brief as amicus curiae concerning
alleged subsidies of Carbon Steel imports by foreign governments. Finally, the Bureau also offered comments
to a variety of state and Federal entities concerning developments in health, communications, energy and
securities markets.
CONSUMER PROTECTION MISSION
The mission of the Bureau of Consumer Protection is to eliminate unfair or deceptive acts or practices in
or affecting commerce, 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. Its
activities can be grouped into five program areas: Advertising Practices; Credit Practices; Service Industry
Practices; Marketing Practices; and Enforcement. In addition, the Bureau has a Policy and Evaluation Unit,
and an Office of Consumer and Business Education.
ADVERTISING PRACTICES
The Advertising Practices program focuses on the elimination of false, deceptive, or unfair advertising.
During fiscal year 1983, the Commission obtained several final consent agreements concerning
advertising. The Meredith Corporation, which operates the Better Homes and Gardens Real Estate Service,
agreed not to make false advertising claims about how it selects its local real estate franchise concerns and
about the services they offer. The North American Philips Corporation, and McCaffrey and McCall, Inc., its
advertising agency, agreed not to make curative claims regarding razor bumps for the "Black Pro" razor
without adequate scientific evidence. Two companies, Heatcool and Plaskolite, Inc., agreed not to make false
advertising claims about their storm windows. Stihl, Inc. and its ad agency, Stuart Ford, Inc. agreed not to
advertise contrary to fact that Stihl chain saws are the fastest-starting and smoothest-running. Champion Home
Builders Company agreed to pay cash settlements totaling up to $550,000 to consumers and dealers who
purchased its allegedly defective residential solar furnaces

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FEDERAL TRADE COMMISSION

and collectors, to warn customers about potential fire hazards, and not to misrepresent the furnace's
performance capabilities. Amana Refrigeration, Inc. will not claim that only its microwave ovens passed
independent laboratory tests conducted in 1980, and that its ovens were rated "best quality" in a 1980
consumer survey.
The Commission issued two parallel final decisions prohibiting the Bristol-Myers Company and Sterling
Drug, Inc. from making advertising claims that their non-prescription pain relievers have been proved safer
or more effective than similar products without well-controlled clinical tests to back up their claims. The
decisions also cover Ted Bates & Co. and Young & Rubicam, Inc., the advertising agencies involved.
Two Administrative Law Judge initial decisions were released. Cliffdale Associates was prohibited from
falsely advertising that its "Ball-Matic Valve" could cut gasoline consumption by 20 % or more. The
Thompson Medical Company was prohibited from employing the brand name "Aspercreme" unless it clearly
discloses that the product does not contain aspirin.
The Commission issued an administrative complaint and filed for a preliminary injunction against
PharmTech Research, Inc. challenging advertisements claiming the diet supplement "Daily Greens" reduces
the chances of cancer. The Commission also issued an administrative complaint against Rush-Hampton
Industries, Inc., charging the manufacturer of the "Ecologizer CA/90" with falsely advertising the performance
capabilities of its air cleaning device.
Braswell, Inc. agreed to pay $610,000 in civil penalties for allegedly misrepresenting that its products or
services would cure or prevent hereditary baldness. Under the consent judgment, Braswell is enjoined
permanently from such misrepresentations.
The Food Advertising Rulemaking proceeding was terminated during fiscal year 1983. The Commission
found the evidence in the record did not show widespread deception, or prove that the benefits of the proposed
rule would exceed the costs. Related issues will be handled on a case-by-case basis.
The Commission released a staff report on its proposed rule for over-the-counter antacid advertisements.
The FTC is asking for public comment on the staff report and the previously released Presiding Officers's
report.
The annual report on Cigarette Labeling and Advertising and the test results for the tar, nicotine and
carbon monoxide content of 208 varieties of domestic cigarettes were published. In another cigarette-related
action, a complaint against Brown & Williamson Tobacco Corp. was filed seeking to permanently enjoin the
company from claiming that "Barclay" cigarettes deliver only 1 mg. tar.
Several previously existing orders in the advertising area have been modified during fiscal year 1983. The
Commission modified a consent

ANNUAL REPORT 1983

9

order against H&R Block, Inc. to conform with Internal Revenue Service regulations. A 1974 order was
modified to state that new evidence suggests that "Lysol" may have more of an impact on colds and germs than
previously thought, and that Sterling Drug, Inc., the manufacturer, can make advertising claims for which there
is a reasonable basis. The Commission modified an order against American Home Products that had
prohibited the maker of "Anacin" and "Arthritis Pain Formula" from making any non-comparative
effectiveness or side-effects claims about the products without a reasonable basis. The change was required
by order of the United States Court of Appeals for the Third Circuit, which affirmed the Commission's order
in all other respects.
CREDIT PRACTICES
The Credit Practices program carries out legislative solutions to problems in the consumer credit market.
The Commission obtained three final consents for alleged violations of the Fair Credit Reporting Act
(FCRA). Trans Union Credit Information Corp., one of the nation's largest computerized consumer credit
reporting agencies, agreed to take a number of steps to comply with FCRA, including improving the accuracy
of its credit reports. The Southern Maryland Credit Bureau, Inc. will tighten its procedures for furnishing
credit reports. The Medical Information Bureau, Inc., which maintains files on some 12 million Americans,
consented to allow consumers to dispute items in their files more easily and to take additional steps to assure
compliance with the FCRA.
Actions brought under the Equal Credit Opportunity Act (ECOA) include a complaint filed in U.S. District
Court against Allied Stores Corporation, one of the nation's largest department store chains. The complaint
seeks civil penalties and would require Allied to send corrective notices to applicants who were denied credit
and did not receive sufficient explanatory information. In the Commission's first age discrimination case under
ECOA, Aristar, Inc. agreed to pay $90,000 in civil penalties to settle allegations that it had violated the law.
Finally, the Commission filed a complaint in U.S. District Court alleging that ITT Consumer Financial
Services had engaged in marital status discrimination through its requirements in community property states.
The Commission obtained civil penalties in a number of Fair Debt Collection Practices Act (FDCPA)
actions. FDCPA actions against four debt-collection companies, The Consumer Finance Company, the Iowa
Credit Syndicate of Ft. Dodge, Inc., Cash Flow, Inc., and the Utah Bureau of Collections, netted a total of
$116,500 in civil penalties. Milton Shaffner agreed to pay $5,000 in civil penalties and to have his employees
obey the FDCPA. This consent judgment settled the Commission's first case involv-

10

FEDERAL TRADE COMMISSION

ing a debt collection agency owned and operated by an attorney, signalling that others with similar operations
may not qualify for the attorney exemption in the FDCPA. In another FDCPA enforcement action, the
Commission was granted a permanent injunction to stop the Bureau of Collections from using illegal practices
in collecting debts for creditors.
Three matters under the Truth-in-Lending Act (TILA) were completed. Hofmann Construction Company,
a home builder, agreed to pay $62,500 in civil penalties to settle charges that it violated a 1973 consent decree.
The Chicago Metropolitan Pontiac Dealers Association, and its advertising agency, the Competitive Edge, have
agreed to display credit terms in their television ads for at least five seconds, giving consumers enough time
to read them.
An Administrative Law Judge upheld Commission charges that Rentacolor, Inc. violated consumer leasing
laws by failing to provide complete disclosures in advertisements and lease contracts. This is the first
Commission action brought under the Consumer Leasing Act.
The Commission tentatively adopted certain provisions for a Credit Practices Rule. The rule would
eliminate five consumer credit contract provisions (creditor remedies) found to be commonly included in credit
contracts and which cause substantial economic injury to consumers.
The Commission modified various orders in credit-related matters during fiscal 1983. A 1974 consent
order with G C Services Corp. was modified to conform to the provisions of the Fair Debt Collection Practices
Act. An order against Fred Meyer, Inc., a discount retailer, was modified to allow longer time periods for
customers to settle their layaway accounts.
MARKETING PRACTICES
The Marketing Practices program takes enforcement action against companies believed to be using unfair,
deceptive or fraudulent practices at the point of sale.
The Commission charged that BayleySuit, Inc. knew about but had not recalled 6,000 survival suits that
had life-threatening defects. In the consent agreement, the company agreed to use its best efforts to contact
all users of the affected cold water immersion survival suits, and to send a free repair kit to them upon request.
The Commission issued a complaint against Figgie International, Inc. alleging that "Vanguard" heat
detectors do not provide sufficient warning in the event of fire to allow occupants of a house to escape safely.
National Transportation Consultants, Inc., and five individuals agreed to permanent injunctions against
misrepresenting their services. Among other practices, the Commission charged that their "Help Wanted" ads
were attempts to induce customers to spend $2,000 for truck driver training and counseling services.

ANNUAL REPORT 1983

11

The Commission sought to permanently enjoin Kitco of Nevada, Inc. from unfair or deceptive practices
in the marketing and sale of the "Kitco business opportunity". A U.S. District Court issued a preliminary
injunction in June, 1983. The Commission alleged that Kitco, when selling machines for making plastic items,
misrepresented potential earnings.
Jim Clark's Beef, Inc., agreed to pay $10,000 in civil penalties to settle charges that the company used "bait
and switch" tactics to sell their beef products.
A federal judge found James R. Quincy, a top official of the Paradise Palms Vacation Club, in contempt
of court and ordered him to stay out of the time-share business. Quincy was assessed $15,000 for legal fees
in the Commission's action against him.
The Commission issued two order modifications in the marketing practices area during fiscal 1983. An
order governing the sales practices and recruitment policies of Encyclopaedia Britannica, Inc. was modified.
A consent order with Success Motivation, Inc. was modified to provide prospective franchisees and
distributors with more information on sales data and success and failure rates, so that they may better evaluate
their chances for success.
SERVICE INDUSTRY PRACTICES
The Service Industry Practices program deals with unfair, deceptive or anticompetitive practices in the
service industries.
Numerous civil actions were filed concerning the $200 million-a-year industry that provides filing services
for investors who want to lease oil and gas rights on federal land. A complaint against the U.S. Oil and Gas
Corp., the Eagle Oil and Gas Corp., and the Stratford Company, alleged that they used false and deceptive
practices in the sale of oil and gas lottery filing services. The Commission sought an injunction barring Leland
Industries from falsely claiming that customers will obtain "highly valuable" leases, and a refund of money
that customers have lost. The Commission obtained a stipulated preliminary injunction barring J&R Marketing
Corp. from misrepresenting its success in obtaining gas or oil lease rights for its customers, or the number of
competing applications for lease rights. The Commission obtained an order in U.S. District Court against First
Petroleum of America, Inc. requiring the company to pay $125,000 into a redress fund for customers who were
misled by the company.
The Commission filed a complaint in U.S. District Court against the Kimberly International Gem Corp.
seeking a permanent injunction and consumer redress for alleged misrepresentation of the value of the colored
gemstones it sells for investment, and the risks involved. A preliminary injunction was obtained in September,
1983.

12

FEDERAL TRADE COMMISSION

During fiscal 1983, the staff and Presiding Officer's reports were published on the Standards and
Certification Rulemaking proceeding. These reports were then subject to a 90-day public comment period
ending September 6, 1983, followed by a 45 day rebuttal period. In addition, the rulemaking record was open
during the comment period to receive evidence on current complaint processing by standards organizations
to determine whether circumstances have changed since the record was closed early in 1980.
ENFORCEMENT
The Enforcement program monitors compliance with Commission orders for the Bureau of Consumer
Protection, handles all order modifications for the Bureau and is responsible for the implementation and
enforcement of most Commission rules. A number of actions related to trade regulation rules and FTCenforced statutes were taken during fiscal 1983.
The Commission set January 1, 1984, as the effective date for those portions of the Funeral Practices Rule
pertaining to misrepresentations. The effective date for portions relating to the itemized price list and required
disclosures is set for April 30, 1984. The Funeral Rule would assure funeral purchasers full price information
before purchase, and it would prohibit funeral directors from numerous kinds of misrepresentations.
The Commission published in a Federal Register notice amendments to its Care Labeling Rule. The
amendments will require care labels on apparel to carry more detailed washing, drying and dry cleaning
instructions.
The Commission published an Advanced Notice of Proposed Rulemaking on the Games of Chance Rule.
The notice indicated that the Commission is considering amendments to the rule that would reduce
requirements involving recordkeeping and broadcast advertising disclosures. In addition, the notice invited
the public to make recommendations for amendments to any other areas of the rule.
The Commission sought comments on whether to amend the Hobby Protection Act rules affecting
imitation coins, because some coins on the market now are nearly as small as the word "COPY" they are
required to bear under present regulations.
The Commission reviewed its Door-to-Door Sales Rule and asked for comments in two Federal Register
notices. One notice solicited information on how the rule has affected small businesses. The other notice
contained a request for comment on two studies prepared by the FTC that evaluate the rule's effects on industry
and consumers.
The Commission also sought comments on amending the Wool Products Labeling Act. The proposed
change would allow manufacturers to disclose the average amount of wool, instead of the minimum amount
of wool, in wool blend fabrics.

ANNUAL REPORT 1983

13

In fiscal year 1983, the Consumer Protection Mission obtained $1,209,200 in civil penalties for violations
of previously issued orders on Commission rules.
The Commission obtained a number of civil penalties in the enforcement area. Filed in the U.S. District
Court, Standard Educators, Inc. was permanently enjoined from using false and deceptive claims in selling its
New Standard Encyclopedia and other books, and will pay $25,000 in civil penalties for violating a 1971
consent order. Pacific Coast Manufacturing Co., Inc. agreed to pay $15,000 in civil penalties to settle charges
that it violated the R-Value Rule by overstating the effectiveness of one of its products and misrepresenting
its fire safety characteristics. Li'l Peach of Massachusetts, Inc. agreed to pay a $10,000 civil penalty to settle
charges that it made earnings claims for its convenience store franchises without making the necessary
disclosures required by the Franchise Rule. The Video Station Inc. agreed to pay $55,000 in civil penalties
to settle charges that it did not comply with the Franchise Rule. Super Market Media, a mail-order firm, and
owner Nathan Peleg, agreed to ship approximately 65,000 prepaid packages of merchandise and pay a $10,000
civil penalty in response to a Commission complaint charging them with failure to inform customers of their
rights under the Mail Order Rule. Thermtron Products, Inc. agreed to a $42,500 civil penalty consent decree
for alleged violations of the R-Value Rule. The company is permanently prohibited from using testing
procedures not specified by the rule, failing to label insulation packages as required by the rule, and failing
to provide retailers and installers fact sheets on R-values. Allied Publishers Service agreed to a $140,000 civil
penalty consent decree for allegedly violating a 1972 Commission order and the Door-to-Door Sales Rule.
The Commission obtained a permanent injunction and a civil penalty of $15,000 against the Union Circulation
Company for alleged violations of the Cooling Off Rule.
Several civil actions have been filed by the Enforcement program. In a complaint filed in federal court
the Commission charged that Northern Feather International Inc., mislabeled the down and feather content of
its pillows and comforters, in violation of a 1956 order. The complaint asks for civil penalties and an
injunction. In U.S. District Court the Commission is seeking restitution from Ferrara Foods, Inc. for investors'
losses and a permanent injunction against challenged practices. A preliminary injunction was obtained in
April, 1983. The Commission is seeking civil penalties in a complaint filed in U. S District Court against
Leisure Time Electronics, Inc. for failure to comply with the disclosure requirements of the Franchise Rule.
In compliance with a federal appeals court ruling, the Commission modified an order against Equifax, Inc.
to eliminate prohibitions against the company's evaluating and rewarding its employees by the amount of
adverse information they gather on consumers. Under a modified order,

14

FEDERAL TRADE COMMISSION

Reader's Digest Assn. may now use "simulated checks" and is no longer prohibited from claiming contestants
are "lucky" or have been "especially selected" to win a prize. A negotiated settlement between the
Commission and The Kroger Company resulted in a 1981 Commission order being modified to allow the
company to conditionally use survey-based, comparison price advertisements.
POLICY AND EVALUATION
In addition to its cases, rulemakings, and other activities to remedy problems arising in the market, the
Commission has traditionally been active in providing analytical support and expert opinion to other
government agencies. Various Commission fiscal 1983 filings and testimony, in which the Bureau of
Consumer Protection played a major role, are represented below.
The Commission contributed comments in response to a request from the Interstate Commerce
Commission. The comments urged the adoption of a proposal that would allow contract truck companies to
apply for operating authority to serve a broad class of shippers.
Comments were submitted to the Postal Rate Commission analyzing two competitive issues relevant to
the Postal Service's request for a rate increase. A separate set of comments urged denial of the Postal Service
request that it be allowed to set a rate for its electronic mail service that would cause the service to operate at
a net loss until 1987.
Comments were presented to the Board of Licensing Health Care Facilities of the State of Tennessee.
They discuss the role of the FTC in both the public and private sectors to remove obstacles hindering
competition among licensed health care providers practicing within the requirements of Tennessee state law.
The Commission continued to assess the economic effects of its activities through various studies
coordinated by the Impact Evaluation Unit. These studies assist in enabling the Commission to adjust its plans
and enforcement activities to maximize consumer and business benefit at the least cost to all parties involved.
Among the studies completed in fiscal 1983 was a follow-up impact study of the Commission's R-Value
Insulation Rule. This survey of a national sample of consumers measured the extent of knowledge about and
use of the R-value information provided as a result of the rule. The results will be compared to the baseline
study (completed in 1980) to measure the impact of the rule.
A follow-up impact study on the Appliance Energy Labeling Rule was also completed this fiscal year.
This study replicated the Appliance Energy Labeling baseline study conducted in 1979. A national sample
of consumers was surveyed to measure the extent of knowledge and use of energy infor-

FEDERAL TRADE COMMISSION

15

mation provided as a result of the rule in appliance purchases. The results will be compared to the baseline
study to evaluate the impact of the rule.
OFFICE OF CONSUMER AND BUSINESS EDUCATION
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. Thus, the
consumer and business education program is a cost-effective way of obtaining compliance with the law.
In fiscal year 1983 a television public service campaign on creative home financing was aired. In response
to this campaign, the Commission distributed more than 300,000 copies of the "Mortgage Money Guide"
booklet it produced for consumers.
Other consumer and business education activities included the publication of various brochures, booklets,
and fact sheets. A booklet entitled "How to Write a Wrong" was produced in connection with the American
Association of Retired People. The Commission produced eight "Facts for Consumers" on topics including
contest cons, car advertisements, and gemstone frauds. The Commission produced materials for business on
the Mail Order Rule, and "Writing a Readable Warranty".
ECONOMIC ACTIVITIES
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 1983, the
Bureau of Economics continued to provide guidance and support to those activities. As has been the case in
the past, the bulk of Bureau of Economic's resources was committed to support for and analysis of
investigations, litigation, and rulemaking. In the antitrust area, economists developed investigation plans,
carried out investigations, collected data and evidence, and offered advice on the economic merits of potential
antitrust actions. The primary objective was to distinguish situations where the marketplace performed well
from situations where consumer welfare might be augmented by Commission action, and to advise on
appropriate actions. Commission antitrust economists devoted considerable effort to increasing the availability
and economic evidence at all levels of antitrust enforcement activities. When

16

ANNUAL REPORT 1983

enforcement actions were initiated, economists worked to integrate economic analysis into the proceeding and
to devise remedies that would facilitate competition. Staff economists also testified in cases. In a role that
is still somewhat new, economists who were 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, product quality and product variety. Bureau economists provided
internal advice on the competitive impact of various regulations and proposed trade rules. Using expertise
derived from studies of various industries and trade practices, economists helped to evaluate cases in credit
practices, advertising, product defects, warranties, and a wide variety of other consumer protection issues.
Working with the staff of the impact evaluation group, economists helped design and carry out survey research
aimed at determining the effects of various FTC initiatives and policies. Finally, economists analyzed and
contributed to proposed policy protocols in several areas, including product defects.
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 undertaken by the Bureau of Economics.
In 1983, economists conducted a number of studies on a broad array of topics in antitrust, consumer protection,
and regulation.
In the antitrust area, economists completed reports on vertical restraints, market definition, and persistence
of high profits in particular markets over long periods. In addition, economists began or continued work on
resale price maintenance, for-profit hospitals, the effects of antitrust remedies in experimental markets,
competitive effects of various auction mechanisms, and incentives for oligopolistic behavior in the steel
industry. Finally, numerous research projects using the Commission's Line of Business data were initiated,
and a large number of papers were released; economists also completed 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 advertising restrictions on the prices of legal services, consumer opinions of automobile
reliability, the effects of the FTC's Franchise Rule on advertising, and the effects of information scarcity in
experimental markets. New study topics during 1983 included the role of information in the markets for auto
insurance and life insurance.
In the regulation area, economists continued to participate in a program of commenting on the competitive
effects of various regulatory activities. Examples of this work include: publication of a study estimating

ANNUAL REPORT 1983

17

the costs imposed on air travelers by the FAA policy of allocating airport landing rights administratively rather
than through a market; testimony before the House Subcommittee on Monopolies and Commercial Law,
opposing antitrust immunity for ocean liner companies; comments filed with the Virginia Deputy Health
Commissioner opposing entry restrictions on home health care providers; comments to the House Committee
on Energy and Commerce opposing a bill requiring auto manufacturers to include a minimum domestic parts
content in their autos and light trucks; testimony before the Motor Carrier Ratemaking Study Commission in
favor of removing antitrust immunity for trucking rate bureaus that establish rates for intercity buses; and
testimony before the Senate Subcommittee on Surface Transportation in favor of regulatory reform. Other
activities included analyses of competitive issues involving motor contract carriers, network cable crossownership, ownership and syndication rights to television programming, lumber exports from Canada,
discounting of sales charges in the selling of mutual funds, and the Postal Services E-COM
service.
Several ongoing study projects in the Bureau cut across the various FTC missions. Current research
included topics such as antitrust analysis of research and development joint ventures, regulations that restrict
the adoption of certain inventory valuation methods, the effects of retail milk price regulation by states,
securities regulation, building codes and innovation, certificate-of-need regulation, and economic analysis of
the "sports market."
THE REGIONAL OFFICES
During fiscal 1983, the Commission, with the concurrence of the Appropriation committees of the House
and Senate, restructured the regional offices. Under the new plan, all of the Commission's ten regional offices
have been reduced to more efficient sizes, and most of the offices have had new management appointed. It
is believed that this restructuring will enable the regional offices, as well as the Commission, to more
efficiently utilize available resources and to carry out those law enforcement activities best suited to the
economic conditions of their areas.
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 groups of numerous types.

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FEDERAL TRADE COMMISSION
EXECUTIVE DIRECTION,
ADMINISTRATION AND MANAGEMENT

The Office of the Executive Director is the primary management organization of the FTC which
implements the policies and decisions of the Commission. The Executive Director is responsible for providing
overall administrative support for agency functions and organizations through a series of organizations such
as Personnel, Budget and Finance, Data Processing, etc. In addition, the office has primary responsibility for
the agency's regional operations, which consist of 10 offices and one field station located throughout the U.S.
Fiscal 1983 was a year of declining resources, both in terms of dollars and workyears available to the
agency. The major management activities in fiscal 1983 were resource management and the implementation
of a regional office restructuring plan.
Resource management activities included numerous contingency plans based on alternative resource levels
likely to be made available by Congress. In addition, a hiring limitation was in effect for the entire year and
major efforts were taken to analyze and manage skills mix and grade levels in all organizations. An active cost
reduction program was undertaken that realized savings in the long term of approximately $2 million.
The reorganization undertaken the previous year was implemented with progress made towards the goal
of more efficient information resource-management. An additional computer for in-house operation was
procured along with related equipment to reduce costs and improve performance. A text-processing
standardization decision was made and implemented that increases staff productivity.
An employee relations and development organization was created within the Division of Personnel to more
fully utilize the human capital of the agency by linking performance, pay incentives, discipline and good
management.
The agency utilized approximately 1,315 workyears and spent $66.7 million or $.1 million less than was
appropriated and $2.1 million less than fiscal 1982.
The Regional Office restructuring plan was implemented after Congressional consultations in March,
1983. Regional Offices were reduced to 18 workyears in most cases and those displaced were offered jobs
in headquarters organizations. A program of revitalization of the regional network was undertaken and many
of the vacant regional director positions were filled.
Progress was made during the year toward the goals of improving agency administration and management,
effectively managing declining resources and maintaining an effective and efficient regional network.

APPENDIX
PART II (Investigative Stage)
CONSENT AGREEMENTS ACCEPTED
AND PUBLISHED FOR PUBLIC COMMENT
COMPETITION MISSION
Great Dane Distributors Council
Great Dane Distributors Council, an association composed of dealers of Great Dane Trailers Inc., agreed
not to impose territorial or customer restrictions among its members. Under a separate agreement, Great
Dane Trailers Inc., a major truck manufacturer, is prohibited from supporting the dealers charged with
restraining competition among themselves. The consent agreement forbids the dealers' association from
discouraging member dealers from selling outside a specified area or to prescribed customers, and Great
Dane Trailers is prohibited from supporting efforts of the dealers' association to limit competition through
agreements that restrict sales to preassigned territories or customers.
The Washington, D.C. Dermatological Society
The Washington, D.C. Dermatological Society agreed not to interfere with dermatologists' truthful
advertising. The complaint alleged that the Society's restrictions deprived consumers of information and
constituted a conspiracy to restrain competition. The complaint also alleged that the group threatened to
deny membership to any physician associated with a health care delivery organization that advertised the
identity, fees or services of an affiliated doctor. Under the agreement, the Society is prohibited from
restricting truthful advertising of prices, services or facilities, but is permitted to adopt and enforce
reasonable ethical guidelines governing false and deceptive advertising.
Dillon Companies, Inc.
A Kansas based grocery retailer, Dillon Companies Inc., was prohibited from interfering with any
independent firm's collection and publication of comparative price surveys based on items checked in
Dillon grocery stores. The complaint alleged that Dillon agreed with other area
19

20

FEDERAL TRADE COMMISSION
grocers to bar a survey firm's price checkers from their stores. It is also alleged that Dillon also tried to
force the survey firm to buy the items it checked. The complaint charged that the alleged group boycott
suppressed price competition among grocers in the Springfield, Missouri area, and deprived consumers
of the advantages of price information. Under the order, Dillon is prohibited from impeding the gathering
of price data and must take steps to restore competition by using price surveys in the Springfield area.

CONSUMER PROTECTION MISSION
Avco Financial Services, Inc.
Avco Financial Services, a debt collection agency, agreed not to use profanity, harassment, physical harm
threats, legal process threats, embarrassment, and defamation to obtain payments. Avco also will not
contact employers, friends, and relatives of debtors unless the debtor permits. It will inform debtors of
their rights to prevent harassment and establish a toll free phone line to receive and record consumer
complaints.
Lomas & Nettleton Co. of Virginia Beach, et al.
Lomas & Nettleton agreed to maintain procedures to ensure prompt payment of obligations due from
homeowners' escrow accounts. The agreement settles charges that the company in numerous instances
failed to pay hazard insurance premiums on time from homeowners' escrow accounts.
Emergency Devices, Inc., et al.
Emergency Devices agreed not to make false performance and endorsement claims in the marketing of
"Extra Margin" emergency escape masks. The company agreed not to claim that the product provides
protection from carbon monoxide, allows "filtered breathing" for 20 minutes or more, and has government
approval.
Monte Proulx
The principal of Emergency Devices, Inc. agreed to abide by the provisions of the consent agreement
described above.

FEDERAL TRADE COMMISSION

21

Estee Corporation
Estee Corporation, a leading manufacturer of health-related specialty foods, agreed not to advertise that
its foods are healthful or appropriate for diabetics' diets without adequate substantiation. The company
will also pay $25,000 in consumer redress in the form of research grants to the American Diabetes
Association or the juvenile Diabetes Foundation.
Lloyd's Furs, Inc.
Lloyd's Furs, Inc. agreed not to represent a garment as the product of a particular designer or manufacturer,
unless the representation is factual. The agreement settles charges that the company attached designer or
manufacturer labels to some garments it sold without regard to who the actual designer or manufacturer
was.
Macy's New York, Inc.
Macy's agreed to change its credit billing practices and to set up a program to educate its employees who
either establish credit billing procedures or handle notification of billing errors. The company allegedly
began collection procedures before disputes were settled. It also agreed to distribute $225,000 in
consumer redress among credit card customers who disputed their bills during 1977 and 1978.
American Express Company
The American Express Company agreed to comply with the provision of the Fair Credit Billing Act.
Under the agreement, American Express will not dun credit card customers for contested amounts until
the dispute is resolved. In addition, the order requires American Express to resolve alleged billing errors
involving foreign purchases within a specified time period.
Christian Services International, Inc.
Christian Services International, Inc., a life-care home developer, marketer, and operator, agreed not to
misrepresent, among other things, that some of the life care homes are affiliated with a religious
organization, and that membership involves little or no financial risk. Alleged factual omissions include
that subcontracting is channeled to affiliates of the company thus eliminating the benefits of competitive
bidding, and that current litigation could materially affect its ability to perform under the contract. The
proposed consent order terminates the alleged

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FEDERAL TRADE COMMISSION
misrepresentations and mandates a disclosure of material facts at least five days before a contract may be
signed with a prospective member.

Spinal Health Services, Inc., et al.
Spinal Health Services uses a "cold laser" to perform non-surgical face lifts. It agreed not to claim that
the "cold laser" treatments are effective for improving appearance by removing lines, depressions, and
wrinkles unless it has scientific proof.
Laser Toning Center, Inc., et al.
Laser Toning Center was changed with the same deceptive acts in advertisements of "cold laser" face lifts
as Spinal Health Services, Inc. It also signed a consent order agreeing not to make unsubstantiated claims.

ANNUAL REPORT 1983

23

PART II (Investigative Stage)
CONSENT AGREEMENTS ISSUED IN FINAL FORM
COMPETITION MISSION
Association of Independent Dentists
The Association of Independent Dentists (AID), a group of dentists practicing in Pueblo County, Colorado,
agreed not to interfere with its members' efforts to compete for business through advertising. Under the
terms of the consent agreement, the Association is prohibited from attempting to influence insurance
company reimbursement rates to Association members. In addition, the Association is required to provide
each member with a copy of the Order and a letter specifying the changes to the bylaws; new members
must be supplied with a copy of the order.
Germaine Monteil Cosmetiques Corporation
Germaine Monteil agreed not to fix the, resale prices of its products. The Commission charged that
Germaine Monteil, a leading manufacturer of prestige cosmetics and fragrances, established and
maintained the resale prices at which retailers advertised and sold its products. The order prohibits the
suggestion or recommendation of resale prices for two years and prohibits Germaine Monteil from
retaliating against retailers because of their pricing decision.
Batus, Inc.
Batus, Inc. agreed to divest one of its retail department stores in the Milwaukee, Wisconsin area to an
acquiror approved by the FTC. The complaint accompanying the consent agreement alleged that the
acquisition of a Marshall Field & Co. department store violated the antitrust laws because it eliminated
competition between the two retailers, discouraged possible market entrants, and reduced competition in
the already highly concentrated area of Milwaukee, Wisconsin. To comply with the order, within two
years after the divestiture, Batus must open or begin construction, in the Milwaukee area, of another
Marshall Field department store to preserve a wider variety of consumer choices by ensuring Marshall
Field's continued presence in the market. In addition, the agreement restricts Batus' future acquisitions
of department stores.

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FEDERAL TRADE COMMISSION

Canada Cement Lafarge Ltd.
Canada Cement Lafarge Ltd., a major cement manufacturer, agreed to divest one of its cement plants
within eighteen months. The complaint prepared as part of the consent alleges that Canada Cement
Lafarge's acquisition of General Portland Inc., which is also engaged in the production of cement,
decreased competition in the southeastern U.S. by combining two direct competitors in violation of the
antitrust laws. The consent order requires CCL to offer the plant's acquiror the opportunity to purchase
distribution terminals and land over the next five years.
ConAgra, Inc.
Under the terms of a consent agreement, ConAgra, Inc., a major manufacturer and distributor of bakery
flour, agreed to divest several production and distribution facilities in the western United States within
fifteen months. 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 prohibits future
acquisitions of assets or any other interest in any flour milling plant located in the western United States
for ten years.
Allied Corporation
Allied Corporation, a leading supplier of chemicals to the electronics industry, agreed to divest its Hi-Pure
Chemicals Inc. subsidiary within 15 months to a Commission approved purchaser. The complaint alleged
that the acquisition of Hi-Pure's parent, Fischer Scientific Company, lessened competition and increased
concentration in three high-purity acid markets: high-purity nitric, hydrochloric and hydrofluoric. Under
the agreement, Allied must give Hi-Pure's purchaser a ten-year royalty free license to its patents relating
to manufacturing and packaging of high-purity acids used in the semiconductor industry and in
laboratories. In addition, Allied is prohibited from acquiring any interest or assets of a high-purity acid
maker for a period of 10 years.
Michigan Association of Osteopathic Physicians and Surgeons
The Michigan Association of Osteopathic Physicians and Surgeons agreed not to impose restrictions on
truthful advertising and patient solicitation by its members. The complaint alleged that the association
threatened to take disciplinary actions against members who

FEDERAL TRADE COMMISSION

25

advertised or solicited patients, and tried to prohibit certain advertising media from accepting ads. The
consent agreement did not affect the Association's enforcement of its ethical guidelines governing
deceptive advertising or members' conduct, but required the Association to inform all current and future
members that truthful advertising is permitted.
The Coca-Cola Company
The Coca-Cola Company agreed to divest its Doric Foods Corporation subsidiary to settle antitrust
charges. Doric Foods was acquired in 1982 when Coca-Cola acquired its parent, Associated Coca-Cola
Bottling Co., Inc. Prior to the acquisition, the Coca- Cola Company and Doric were the two leading
competitors in the chilled fruit drink business. The complaint charged that the acquisition would lessen
competition. Under the agreement, Coca-Cola was required to divest Doric within one year to a purchaser
approved by the Commission, and for ten years to obtain Commission approval before acquiring a chilled
fruit drink manufacturer.
State Volunteer Mutual Insurance Co., Inc.
State Volunteer Mutual Insurance Co., Inc., a physician-owned medical malpractice insurance company,
agreed not to discriminate against physicians who supervise self-employed nurse-midwives. The
complaint accompanying the consent agreement alleged that State Volunteer's cancellation of the
malpractice insurance of physicians who provided medical supervision to independent nurse-midwives
constituted a boycott under the antitrust laws. Under the agreement, State Volunteer was prohibited from
using discriminatory underwriting criteria against physicians affiliated with nurse-midwives and required
to provide certain procedural safeguards to physicians whose insurance is terminated.
CONSUMER PROTECTION MISSION
North American Phillips Corporation, et al.
The North American Phillips Corporation agreed not to claim that the "Black Pro" shaver will eliminate
or effectively treat razor bumps, unless it has reliable scientific evidence to substantiate the claims.
Meredith Corporation
The Meredith Corporation agreed to an order prohibiting it from using false and misleading information
in its representations concerning

26

FEDERAL TRADE COMMISSION
the training and quality of its member real estate agents, the existence and exclusivity of certain services,
and the degree of screening each prospective agent must undergo. In addition, such claims must be
supported by competent and reliable evidence.

Southern Maryland Credit Bureau, Inc.
The Southern Maryland Credit Bureau, Inc. agreed to obtain the substantiation required by the Fair Credit
Reporting Act from subscribers and inform them of federal penalties for obtaining credit information under
false pretenses. Under the terms of the agreement, it will take reasonable efforts to verify the identity of
and the uses certified by each new subscriber prior to furnishing consumer reports to the subscriber.
Heatcool Corporation
The Heatcool Corporation agreed not to make misrepresentations and not to perform specific deceptive
and false comparative demonstrations in advertisements concerning the insulating ability and R-Value of
its storm windows.
Plaskolite, Inc.
Plaskolite, Inc. agreed to an order prohibiting it from making false and misleading advertising claims in
the marketing of its storm windows. The alleged misrepresentations indicated substantial reductions in
heat loss and substantial savings from the use of its products. The company agreed to have reliable test
results or other reliable objective materials to substantiate its claims.
Medical Information Bureau, Inc.
The Medical Information Bureau agreed to an order prohibiting practices in violation of the Fair Credit
Reporting Act. The alleged violations included reporting to members the prior deletion of material from
a consumer's file, requiring consumers to sign exculpatory waivers for the corporation and its members
before releasing information from the consumer's own files to them, and inadequate reinvestigation of
disputed information.
Competitive Edge, Inc.
The Competitive Edge, Inc. agreed to comply with the Truth in Lending Act and not to create, produce
and cause the dissemination of

ANNUAL REPORT 1983

27

television advertisements for its clients in which credit terms are displayed too briefly for viewers to read
them. The Commission's complaint alleged that the corporation also failed to label credit terms as "annual
percentage rate" in some advertisements.
McCaffrey and McCall, Inc.
The McCaffrey and McCall, Inc. advertising agency agreed not to represent that "Black Pro" shavers can
cure razor bumps unless substantiated by competent and reliable scientific evidence.
Chicago Metropolitan Pontiac Dealers Association, Inc.
The association agreed to comply with the Truth in Lending Act, to display credit terms for at least five
seconds, and to state finance charges as an "annual percentage rate" in their televised advertisements.
BayleySuit, Inc.
The Commission charged that the company knew about, but had not recalled, 6,000 survival suits that had
life threatening defects. The company agreed to use its best efforts to contact all users of the affected cold
water immersion survival suits, and to send a free repair kit to them upon request. The alleged defect
caused a flotation pillow that keeps the head and shoulders above water to fail. The Coast Guard estimates
that the pillow doubles the survival time.
Trans Union Credit Information Company
The Trans Union Credit Information Company agreed not to give credit information for investigative
purposes and to review its credit reporting system to detect and remedy significant inaccuracies in
information maintained or reported by the system. Under the agreement, the company will comply with
the terms of the Fair Credit Reporting Act.
Foote, Cone & Belding Advertising, Inc.
The advertising agency agreed not to claim that Amana was the only one of six leading microwave ovens
to pass an independent laboratory test and that Amana microwave ovens were rated best in a 1980
consumer survey. It agreed not to advertise surveys, test reports, studies or demonstrations unless they
are objective and reliable. Further, it will maintain records for three years after use of any surveys, tests
or similar evidence.

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ANNUAL REPORT 1983

29

PRELIMINARY AND PERMANENT INJUNCTIONS
CONSUMER PROTECTION MISSION
National Transportation Consultants, Inc., et al.
The Commission's complaint charged this company, and five individuals, with false and deceptive
representations of their services in the trucker training business. The parties have been permanently
enjoined from misrepresenting the earning potential of owner-operators, the quality of the management
and business assistance that they could provide, and their ability to help students find financing for buying
tractor-trailers. They agreed not to misrepresent the nature and extent of services provided in a training
course; the extent or nature of any affiliation with any other entity; and that the training course will qualify
consumers for employment as professional truck drivers. The injunction prohibits the parties from
accepting payment from consumers who do not meet federal, state, or local certification requirements
relating to age, employment, personal history, or physical condition.
Kitco of Nevada, Inc., et al.
The Commission has filed a complaint seeking a permanent injunction, attachment, and consumer redress
against this corporation. A U.S. District Court issued a preliminary injunction in June, 1983. The charges
allege solicitation of investments from consumers of approximately .$24,000 each in exchange for $6,000
worth of manufacturing equipment and allegedly empty promises of "work at home" business opportunity.
The consumer is required to use the Kitco machines to assemble plastic articles which Kitco agrees to
market. According to the complaint, misrepresentations were made concerning earning power, payment
for goods by Kitco, receipt of continuous orders, contracts with large companies, and the production
capacity and waste rate of the machines.
J&R Marketing Corporation
The Commission is seeking a permanent injunction and consumer redress for alleged unfair and deceptive
practices in the business of advising, evaluating, or facilitating real estate investments. A preliminary
injunction was obtained in June, 1983. According to the complaint, consumers participate in a lottery
conducted by the Bureau of Land Management to win oil and gas leases. Usually the likelihood of receiving a lease is small. The company represents to consumers that they can

30

FEDERAL TRADE COMMISSION
increase their chance of winning a valuable lease. They claim to know of parcels both lightly bid and
highly valued. Consumers are told the risk is low and their investment is guaranteed. The Commission
contends these representations are false and have caused substantial consumer injury.

First Petroleum Corp. of America
Under this order, the company agreed to pay $125,000 into a redress fund and accept a permanent
injunction. The action settled charges that the company falsely represented to consumers that it could
virtually assure them of obtaining oil and gas leases. The company may not misrepresent its success rate,
must make specified disclosures in contracts or service agreements, and must not misrepresent the service
it offers. Eligible consumers will receive pro-rated shares of the redress fund.
Ferrara Foods, Inc.
The Commission filed a complaint seeking a permanent injunction and civil penalties for alleged violations
of the Franchise Rule. A preliminary injunction was obtained in April, 1983. The company allegedly
failed to disclose financial substantiation for earnings claims, and failed to give prospective customers
copies of the contract form five days in advance of execution. It also allegedly misrepresented that the
franchises included exclusive distributorships for string cheese, when in fact, anyone could order the
product from the manufacturer.
Bureau of Collections, et al.
Don H. Sly, his non-profit company, The Universal Church of Jesus Christ, and its department, the Bureau
of Collections, were charged with using illegal practices in collecting debts for creditors. The Commission
was granted a permanent injunction to end respondent's violations of the Fair Debt Collection Practices
Act. The illegal acts included threats of legal action which cannot be taken or were not intended to be
taken; using forms designed to resemble judicial notices; intentional overcharges; using false names for
the association; and failing to send debtors a statutory notice of rights under the Fair Debt Collection Act
within five days of the initial contact.
Kimberly International Gem, Inc., et al.
The Commission has filed a complaint against this company seeking a permanent injunction and consumer
redress for alleged misrepresen-

ANNUAL REPORT 1983

31

tation of the value of the colored gemstones it sells for investment, and the risks involved in investing in
those stones. A preliminary injunction was obtained in September, 1983. Alleged misrepresentations
include: offering "wholesale" prices which are many times greater than prices retailers pay; delivering
gemstones inferior in quality to those ordered; engaging in a "gem-switching" scheme to deprive
consumers of valuable gemstones they owned previously; and giving customers "certificates of evaluation"
stating excessive replacement values.
Paradise Palms Vacation Club, Inc., et al.
The Commission obtained a settlement as to defendants Ben and Mary Anne Kirk which permanently
enjoins Ben Kirk from engaging in deceptive practices in the sale of vacation timeshares, and provides for
the payment by each defendant of $50,000 in consumer redress.

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ANNUAL REPORT 1983

33

CIVIL PENALTY ACTIONS
COMPETITION MISSION
Joseph Dixon Crucible Company
The Joseph Dixon Crucible Company agreed to pay $600,000 to settle charges that it violated a
Commission cease and desist order by participating in a price fixing conspiracy. The 1980 complaint, filed
by the FTC in federal court, alleged that the company agreed with competitors to fix prices, sale terms and
discounts at which art materials were sold. The judgment enjoins the companies for 10 years from
entering into agreements with its competitors to fix prices for the sale of art materials.
Louisiana-Pacific Corporation
A $4 million civil penalty was imposed against Louisiana-Pacific Corporation for violating a 1979
Commission order. Louisiana-Pacific was ordered to divest a Rocklin, California, plant acquired in 1978
as part of its acquisition of Fibreboard Corporation, to settle charges that the acquisition could lessen
competition in the manufacture and sale of medium density fiberboard and particle board. Although
Louisiana-Pacific located a buyer over a year after the deadline for the divestiture, the FTC denied
Louisiana-Pacific's request to approve the acquirer. In addition to the civil penalty award, the Commission
asked the Justice Department to request the U.S. District Court for the District of Oregon to appoint a
trustee to find a purchaser for the plant.
CONSUMER PROTECTION MISSION
Standard Educators, Inc.
Standard Educators, Inc. agreed in a consent decree to pay $25,000 in civil penalties for allegedly violating
a 1971 Commission order. The order prohibited false and deceptive representations in door-to-door sales
of encyclopedia. Alleged violations included: selling books at a reduced rate or giving them away in
exchange for either endorsement letters, displaying encyclopedia, or maintaining a set for 10 years; attributing the charges for books solely to postage and handling; representing favorable terms as limited to
the time of the house call; and describing the offer as not available to the general public. The corporation
also agreed to stop contracting with independent distributors found making the prohibited
misrepresentations.

34

FEDERAL TRADE COMMISSION

Consumer Finance Corporation
The Consumer Finance Corporation agreed to a $15,000 civil penalty consent decree to settle charges that
it violated the Fair Debt Collection Practices Act. The alleged violations included: use of profanity;
overbilling; false representation of attorney status; threat of imminent arrest; threat of (illegal) legal action;
and failure to answer consumer requests for information.
Pacific Coast Manufacturing Co., Inc.
The Pacific Coast Manufacturing Co. agreed to a $15,000 civil penalty consent decree for allegedly
violating the Commission's Labeling and Advertising of Home Insulation (R-Value) Rule. The consent
decree enjoins misrepresentations of the fire safety characteristics of insulation, false claims of safety and
quality certification, and misrepresentations of the R-value of the product. This is the Commission's first
R-Value Rule case.
Super Market Media, Inc.
The Commission executed a consent decree with the company which contained a $10,000 civil penalty,
an order to ship approximately 65,000 packages of consumer merchandise, and a permanent injunction
against future violations of the Commission's Mail Order Rule. The alleged violations involved
misrepresentations of money-back guarantees. This settlement provided consumers with the merchandise
they ordered instead of the approximately 1% of value they might have received from bankruptcy
proceedings.
Hofmann Construction Co.
The Hoffman Construction Co. agreed to a $65,200 civil penalty consent decree for allegedly violating
a 1973 Commission order and the Truth In Lending Act. The company, a seller of mobile homes,
allegedly failed to disclose, or improperly disclosed, the annual percentage rate in its real estate credit
advertisements.
Aristar, Inc.
Aristar, Inc. agreed to a $90,000 civil penalty consent decree in the first case involving alleged illegal age
discrimination under the Equal Credit Opportunity Act. Economic statistical data revealed a higher denial
rate for the elderly than for other age groups. The company failed to present adequate explanations for
the pattern. Investigations also

ANNUAL REPORT 1983

35

revealed alleged violations of the Fair Credit Reporting Act. The settlement includes a permanent
injunction against future violations. This was the first time economic statistical models (econometrics)
were constructed for an FTC investigation to detect discrimination patterns.
Li'l Peach Convenience Stores, et al.
Li'l Peach agreed to a $10,000 civil penalty consent decree for allegedly violating the Commission's
Franchise Rule. The company allegedly failed to disclose required financial information to prospective
franchisees prior to the sale of franchises.
The Video Station, Inc., et al.
The consent decree agreed to by the company provided for a $55,000 civil penalty and an injunction
against future violations of the Franchise Rule. The company allegedly did not disclose required financial
information prior to executing franchise contracts with consumers.
Jim Clark's Beef, Inc., et al.
A consent decree providing for a civil penalty of $10,000 was agreed to by this company to settle charges
it injured consumers with false and deceptive advertisements. The alleged violations involved. displays
of beef of one quality to induce consumer interest, followed by a switch to beef of considerably lower
quality for the actual sale. In addition to the penalty, the company agreed to disclose the grade of beef
sold, disclose the need for trimming which would reduce significantly the edible yield, and cease
representing the standard price as a discount.
Iowa Credit Syndicate Of Fort Dodge, Inc.
The Commission alleged this company violated the Fair Debt Collection Practices Act. The Act prohibits
threats of legal actions which may not be taken, and prohibits intentional over-charging of debtors. The
company agreed to pay an $8,000 civil penalty, respect an injunction against future misrepresentations,
and disclose to debtors their rights under the Fair Debt Collection Practices Act.
Cash Flow, Inc., et al.
This company agreed to a consent decree providing for a civil penalty of $13,500 to settle charges it
allegedly violated the Fair Debt Collection Practices Act. The company agreed not to threaten debtors'
credit

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ANNUAL REPORT 1983
records unless it has the capacity and intention to take the actions, and also to disclose to debtors their
rights under the Fair Debt Collection Practices Act.

Milton Shaffner
Mr. Shaffner, an attorney who owns and operates a debt collection agency, signed a consent decree
providing for a $5,000 civil penalty for allegedly violating the Fair Debt Collection Practices Act. The
Act specifically exempts attorneys collecting debts on behalf of, and in the name of, a client. The
Commission interpreted the exclusion to apply to attorneys whose debt collection work coincided with
legal assistance, not to agencies that offer only debt collection services and are owned by attorneys.
Utah Bureau of Collections, Inc.
The Commission obtained a permanent injunction and a civil penalty of $80,000 against this company for
alleged violations of the Fair Debt Collection Practices Act. The company agreed not to allow its
employees to use profanity; call during inconveniently late hours; contact debtors at work without
permission; call consumers collect; misrepresent the identity of the caller and the purpose of the call;
threaten legal action which may not be taken; ask debtors' associates to help them collect debts; or
misrepresent its identity and purpose to debtors' associates in order to locate debtors.
Thermtron Products Inc.
Thermtron agreed to a $42,500 civil penalty consent decree for alleged violations of the Labeling and
Advertising of Home Insulation (R-Value) Rule. The company is permanently prohibited from using
testing procedures not specified by the rule, failing to label insulation packages as required by the rule,
and failing to provide retailers and installers fact sheets on R-values.
Allied Publishers Service, et al.
Allied Publishers agreed to a $140,000 civil penalty consent decree for allegedly violating a 1972
Commission order and the Door-To-Door Sales Rule. The FTC's charges alleged that the company used
deceptive sales tactics and unfair debt collection practices. The company agreed to change its phone
solicitation practices and take steps to ensure that customers understand their cancellation rights.

ANNUAL REPORT 1983

37

Braswell, Inc., et al.
Braswell, Inc. agreed to a $610,000 civil penalty consent judgment for allegedly misrepresenting that its
products or services would cure or prevent hereditary baldness. The company is enjoined permanently
from making these representations unless the product or service has been approved by the Food and Drug
Administration, or efficacy claims are substantiated by reliable scientific evidence.
Union Circulation Company
The Commission obtained a permanent injunction and a civil penalty of $15,000 against this company for
alleged violations of the Commission's Cooling Off Rule. Union Circulation, a door-to-door seller of
magazines, allegedly failed to provide required cancellation forms, misrepresented buyers' right to cancel,
and failed to provide refunds within the required time period after cancellation.

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ANNUAL REPORT 1983

39

ADMINISTRATIVE COMPLAINTS
COMPETITION MISSION
Schlumberger Limited
The Commission's complaint alleged that Fairchild Camera and Instrument Corporation's acquisition of
Accutest Corporation tended to create a monopoly in the market for automatic computer chip test
equipment. The complaint alleged that as a result of the merger, Fairchild, already the dominant firm in
the market, would be further strengthened through the elimination of Accutest as a competitor. Fairchild
was a wholly owned subsidiary of Schlumberger, Ltd.
CONSUMER PROTECTION MISSION
Rentacolor, Inc., et al.
The Commission complaint alleges that the company violated the Consumer Leasing Act in advertisements
promoting leases for color televisions and other video equipment. The advertisements allegedly failed to
disclose that the transaction is a lease, the amount of the periodic payments under the lease agreements,
the total amount of such payment, and whether an option to purchase the equipment existed. The
complaint also alleges that some lease contracts entered into with consumers have similar violations.
Figgie International, Inc.
This complaint alleges that the company's claim that its combination heat detector-smoke detector provides
significantly greater fire protection than a simple smoke detector or heat detector is deceptive. The
Commission charges that the combination devices do not provide sufficient fire warning protection, and
that in nearly all residential fires, life-endangering conditions will occur before the heat detectors sound
an alarm.
Rush Hampton Industries, Inc.
The Commission's complaint alleges that the company made false and misleading representations in
advertisements for its air cleaning appliance. The company allegedly stated that the appliance eliminates
formaldehyde gas, tobacco smoke, dust, and pollen from household air. The Commission alleges that the
appliance can remove no more that 5% of formaldehyde gas from household air, no more than 15% of
tobacco smoke, and cannot eliminate pollen or dust.

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FEDERAL TRADE COMMISSION

PharmTech Research, Inc.
The Commission charged that the company's advertisement claiming that its dietary supplement, "Daily
Greens", is associated with a reduction in the incidence of cancer in humans is unfair and deceptive. The
complaint alleged that the advertisements referred to a National Academy of Science report which
concluded that the ingestion of certain vegetables is associated with a reduction in the incidence of certain
cancers; "Daily Greens" is made from dehydrated vegetables; and that the advertisements claim daily use
will lead to benefits cited in the report. This is an unfair and deceptive representation, the Commission
alleges, because the cited report is expressly limited to consumption of fresh unprocessed vegetables.
Consequently, the company would lack a reasonable basis for the claims. The Commission is also seeking
a preliminary injunction in federal district court to halt the product's current nationwide print and
broadcast advertising campaign.
Amana Refrigeration, Inc.
The Commission charged that advertisements for Amana's "Radarange" microwave ovens falsely claimed
Amana was the only brand that passed four safety tests conducted by an independent testing laboratory.
The complaint also charges that Amana misled consumers by inaccurately presenting results of a survey
that rated consumers' preferences of microwave oven brands. According to the complaint, the vast majority of owners of other brands of ovens did not rate Amana as being the best quality microwave oven, as the
Amana advertisements claimed.
Stihl, Inc., et al.
Stihl, Inc. has allegedly violated the Federal Trade Commission Act in advertisements for its chain saws
and other power tools. Alleged misrepresentations include claims that in 1980 and 1981, the current Stihl
model chain saw was rated best of all home saws tested by a leading consumer magazine, that "power" was
a factor in the rating, that its saws start faster and are smoother running than any other saws on the market,
and that its power tools last at least twice as long as any other power tool on the market. The Commission
contends the magazine test was inapplicable to the model it was linked to. In addition, power was not a
factor considered in the test. The Commission further charged that Stihl lacks a reasonable basis for the
other claims.

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41

PART III (Adjudicative Stage)
CONSENT AGREEMENTS ACCEPTED AND
PUBLISHED FOR PUBLIC COMMENT
COMPETITION MISSION
Ford Motor Company
The Ford Motor Company was prohibited from extending advertising allowances to large car rental
companies unless the subsidies were also made available to competing small car firms. The complaint
included with the consent agreement charged Ford with discriminating against small rental companies by
not offering advertising allowances proportionally equal to those given to larger customers. Under the
proposed order, Ford was required to offer small car rental companies payment of part of the cost of
certain types of Yellow Pages display advertisements.
Flowers Industries, Inc.
Flowers Industries, Inc. was ordered to sell its operating bakery plants in Gadsden, Alabama and High
Point, North Carolina to settle antitrust charges its bakery acquisitions may have reduced competition.
The complaint alleged that acquisitions eliminated competition and increased industry concentration in
various southeastern markets. Under the agreement Flowers was also required to transfer some trade
names and trademarks associated with the two plants. In addition, for ten years the consent agreement
restricts acquisitions of bakeries.
Gillette Company
The Gillette Company agreed to provide advertising and promotional program opportunities on a
proportionally equal basis to both large and small retailers who sell its products. According to the
complaint, Gillette offered advertising allowances only to large retailers who had provided promotional
services on behalf of Gillette's products. The proposed order required Gillette to offer alternate plans for
retailers who did not regularly advertise in newspapers or distribute large numbers of advertising circulars.

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FEDERAL TRADE COMMISSION

Jim Walter Corporation
Jim Walter Corporation and its subsidiary, Celotex Corporation, agreed to divest four asphalt roofing
materials plants within 24 months to settle antitrust charges. Under the order, Jim Walter was required
to divest roofing plants in three states to an acquiror approved by the Commission. The order further
provided that a Commission appointed trustee would divest any plants not sold within fifteen months.
Also, for a period of ten years, Jim Walter and Celotex were prohibited from acquiring any interest in an
asphalt roofing plant within the defined geographic markets without prior Commission approval.
CONSUMER PROTECTION MISSION
General Motors Corporation
The agreement requires the corporation to make product service publications (PSP) available to the public
free or at nominal cost. These publications detail service problems, product modifications, defects, and
new servicing techniques. The availability of the PSPs must be advertised in normal national channels
(including showrooms) and noted in owner manuals, and a toll free number must be established. It is
believed that the PSP will inform consumers of hidden defects in the products and alert them to new
maintenance procedures to avoid costly damage. The agreement also provides for the implementation of
a nationwide third-party arbitration program to settle complaints of individual owners. The arbitrations
must be conducted within recognized arbitration procedure. The expanded public awareness of the
arbitration procedure should give consumers the means to settle disputes.

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43

PART III (Adjudicative Stage)
CONSENT AGREEMENTS ISSUED IN FINAL FORM
COMPETITION MISSION
Texas Dental Association
The Texas Dental Association agreed not to interfere with insurance companies' efforts to minimize costs
by requesting x-rays to evaluate dentists' planned treatment of policyholders. The complaint alleged that
Texas Dental Association violated the antitrust laws by organizing a boycott in which its members
collectively refused to provide copies of patients' x-rays to requesting insurers. Under the terms of the
order, Texas Dental Association agreed not to attempt to influence insurance company policies. In
addition, for four years Texas Dental Association was required to inform new members about the order.
Gulf & Western Industries, Inc.
Under the terms of a proposed consent agreement, Gulf & Western was ordered to sell its Alabama casket
manufacturing facility to a Commission-approved buyer to settle charges that the 1980 acquisitions of
National Casket Co. and Wallace Metal Products Inc. would create a monopoly in casket markets. The
Commission approved the sale the Alabama facility to a newly formed company. In addition, the order
requires Gulf & Western to obtain Commission approval for ten years to acquire a manufacturer of certain
types of caskets or related businesses.
Xidex Corporation
Xidex Corporation, the nation's leading manufacturer of duplicating microfilm, agreed to license its
microfilm technology at a low royalty rate. The consent agreement settled charges that Xidex's acquisition
of the diazo microfilm business of Scott Paper Company and the acquisition of the assets of Kalvar
Corporation, a manufacturer of vesicular microfilm, reduced competition in the industry. Xidex was also
required, within one year, to divest all patents and technology relating to microfilm production acquired
from Kalvar. Xidex' acquisitions in the industry were restricted for a period of ten years.

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FEDERAL TRADE COMMISSION

Borden Inc.
The Commission modified a final order against Borden Inc. which defined the method of pricing to be
used in the sale of ReaLemon, a reconstituted lemon juice product. Under the order, Borden must not
price ReaLemon so that the product's net revenue for any fiscal quarter in any sales district is less than the
variable cost for that quarter and district. Variable costs were defined as those that would not have been
incurred if ReaLemon were not produced. The original order, affirmed in 1982 by the Sixth Circuit Court
of Appeals, prohibited Borden from selling ReaLemon at "unreasonably low prices," but did not define
11 unreasonable." A modified order was issued after Borden and the Commission agreed to a settlement
incorporating some modifications of the original order.
CONSUMER PROTECTION MISSION
Stihl, Inc., et al.
The Commission charged this company with preparing and disseminating false advertising. Among the
claims challenged were that the corporation's chain saw was rated best by a leading consumer magazine,
its saws operate better than any others on the market, and its power tools last twice as long as other brands.
Under this consent order the company agreed not to make the challenged claims and to base any future
claims on the evidence of one or more competent, reliable sources.
Amana Refrigeration, Inc.
Amana Refrigeration agreed not to advertise contrary to fact that only Amana "Radarange" microwave
ovens had passed tests conducted by an independent laboratory. The consent order requires the company
to have a reasonable basis for all future representations about the quality and safety of microwave ovens,
and for all claims comparing the ovens to those of any competitor. In addition, Amana may not use test
or survey evidence to advertise microwave ovens and certain other products unless the results are reported
accurately.
Champion Home Builders Co.
Champion Home Builders used advertisements the Commission alleged were false, misleading, or
deceptive to promote its solar energy equipment. The Commission alleged that the company made claims
that the

ANNUAL REPORT 1983

45

products work automatically with little maintenance, and that the furnaces can withstand 375 degrees
Fahrenheit. According to the complaint, the products allegedly suffer a high rate of failure due to multiple
defects, and high temperature adversely affects them. After the complaint was filed the parties signed a
consent order in which the corporation agree to stop the claims, provide cash settlements of up to $1,500
to each qualified consumer, and warn all users of the equipment of fire hazards.
Ogilvy & Mather International, Inc.
The advertising agency prepared and disseminated advertisements for the product "Aspercreme" which
allegedly were false, misleading, and deceptive. The alleged deception involved advertisements which
implied that the drug contains aspirin, that it has been proven more effective than oral aspirin, and that it
can penetrate through the skin to relieve arthritic pain. The advertising agency agreed in a consent order
not to make representations of a medicinal nature unless it has competent and reliable scientific evidence
substantiating the claims

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47

INITIAL DECISIONS
COMPETITION MISSION
Champion Spark Plug Company
An Administrative Law judge dismissed a 1980 complaint against Champion Spark Plug Company, the
world's largest manufacturer of replacement spark plugs. The complaint charged that Champion's
acquisition of The Anderson Company, the nation's largest manufacturer of replacement windshield
wipers, reduced competition in the replacement wiper blades and parts market. The judge determined that
low barriers to entry, likely expansion by firms in the market, and the market's trend toward
deconcentration had made the market already competitive.
American Medical International Inc.
A decision by an Administrative Law judge ordered American Medical International Inc. to divest French
Hospital because its acquisition in 1979 violated the federal antitrust laws. The complaint alleged that
American Medical had attempted to monopolize the hospital market in San Luis Obispo, California with
the acquisition of French. The judge found that the acquisition would eliminate non-price and reduce price
competition between French and American Medical's other two area hospitals, as well as restricting
competition among the hospitals for the business of insurance companies and other third-party payers.
The judge also found that the acquisition was an attempt to monopolize. American's acquisition of
hospitals within a 13 state area were be restricted for a period of 10 years.
General Motors Corporation
An Administrative Law judge ruled that General Motors Corp. injured competition in the car rental and
leasing business by offering large advertising allowances to a few large car rental and leasing firms and
not offering the same subsidies to smaller companies. GM was prohibited from granting advertising
allowances unless the grants were available on proportionally equal terms to all other competing rental
and leasing firms. In addition, GM was ordered for five years to advertise any program in at least two
publications specified by the Commission.

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FEDERAL TRADE COMMISSION

CONSUMER PROTECTION MISSION
Thompson Medical Co., Inc., et al.
An Administrative Law judge upheld most of the charges of a 1981 Commission complaint against
Thompson Medical Company, maker of "Aspercreme." The issues in this matter included whether the
corporation directly or indirectly represented in advertisements: "Aspercreme" contains aspirin; it is more
effective than orally ingested aspirin for the relief of arthritic, rheumatic conditions and their symptoms;
the product acts by directly penetrating through the skin to the site of the arthritis disorder; whether the
name "Aspercreme" implies the presence of aspirin; and whether such alleged representations are false,
misleading or deceptive. The administrative law judge found that the claims had been made, were false
or deceptive, and had caused harm to the public. The company was ordered to: stop using the name
"Aspercreme" unless a product contains aspirin or prominent disclosures are made that it is aspirin-free;
stop unsubstantiated effectiveness claims; and stop representing that the product is new or involves a new
scientific principle.
Cliffdale Associates, Inc., et al.
An Administrative Law judge upheld charges in a Commission complaint that this company used
deceptive or unfair acts in the advertising, selling, and distribution of the "Ball-Matic Gas Save Valve".
The device was marketed for gas powered motor vehicles. The administrative law judge found the claims
of significant (20 %) fuel savings false. The judge also concluded that the testimonials from consumers
were deceptive and that the company lacked evidence to support the claims. The company was ordered
to stop the various representations until they could be supported by competent and reliable evidence.
Rentacolor, Inc., et al.
An Administrative Law judge upheld charges in a Commission complaint that the company violated
consumer leasing laws by failing to provide complete disclosures in advertisements and lease contracts.
This is the first Commission action brought under the Consumer Leasing Act since it became effective in
1977.

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49

FINAL COMMISSION ORDERS
COMPETITION MISSION
Dairymen, Inc.
The Commission dismissed charges against all parties named in a 1980 complaint challenging the
acquisition by Dairymen, Inc. of Munford's wholly-owned subsidiary, Farmbest Foods Inc., rejecting a
proposed consent as to Dairymen.
Indiana Federation of Dentists
The Commission ruled that the Indiana Federation of Dentists could not boycott dental insurers who
requested copies of existing x-rays for use in determining whether a claim was covered or if less expensive
dental treatment should be done. However, the Commission overturned a 1980 decision by an
Administrative Law judge to dissolve the Federation. The order also prohibited the Federation from
attempting to influence the policies of dental benefit programs in other respects, or from attempting to
induce patients to avoid dentists who cooperate with the dental insurers.
Michigan State Medical Society
The Commission upheld an Administrative Law judge's decision which found that the Michigan State
Medical Society boycotted cost-containment and reimbursement policies of medical insurers. The
complaint alleged that the Medical Society, which represents 80 percent of the state's doctors, attempted
to fix prices by negotiating agreements with Blue Cross/Blue Shield of Michigan and the state's Medicaid
program on behalf of its members. The order bars agreements between the Medical Society and insurers
which set reimbursement terms for its members, agreements which give the Medical Society the power
to cancel participation in insurance programs on behalf of individual doctors, and agreements with its
members to regulate reimbursement policies for physician services. The Medical Society is required to
notify present and future members of the order's requirements.
Ethyl Corporation
The Commission upheld in part a 1981 Administrative Law judge's decision that Ethyl Corporation and
E. I. duPont de Nemours & Co., the nation's leading producers of lead-based antiknock gasoline additives,

50

FEDERAL TRADE COMMISSION
violated the antitrust laws by using a variety of marketing practices which stabilized prices. The
Commission found that Ethyl and dupont restrained competition in the lead-based antiknock compound
market through the use of advance price announcements, uniform pricing and ,"most-favored-nation"
clauses, which promised customers they would receive the lowest price extended to any other customers.
Under the order, Ethyl and dupont are prohibited from using the challenged practices.

Beatrice Foods Company
The Commission dismissed a complaint challenging Beatrice Foods Co.'s 1978 acquisition of Tropicana
Products Inc., one of the nation's leading producers and distributors of chilled orange juice. The dismissal
over-turned an Administrative Law judge's order that Beatrice must divest Tropicana because the
acquisition could substantially lessen competition in the processing, sale and distribution of chilled orange
juice to retail food stores. The Commission concluded that while concentration in the ready-to-serve
orange juice industry was moderately high in 1978, the very slight increase in concentration resulting from
the acquisition did not cause significant harm to competition.
Borg-Warner Corporation
The Commission upheld a 1980 FTC Administrative Law judge's ruling that it was illegal for two
individuals to serve as directors of Borg-Warner, Robert Bosch GMBH and its American subsidiary,
Robert Bosch Corporation. All three companies compete in the sale of ignition parts, wire and cable
products, and carburetor tune-up kits for foreign cars. The Commission imposed a ten year ban on
interlocking directorates. In addition, for the next ten years, all three companies are required to monitor
memberships on other boards by its directors.
The Grand Union Company
The Commission overruled a 1980 FTC Administrative Law judge's decision and dismissed a complaint
against the Grand Union Company's 1978 acquisition of Colonial Stores Inc. The Commission found that
the record failed to establish that the acquisition of Colonial Stores lessened competition in the retail food
industry in relevant markets. The order also dismissed complaints against Grand Union's parent,
Cavenham (USA) Inc. and two other related companies.

ANNUAL REPORT 1983
Massachusetts Furniture and Piano Movers Association

51

The Commission upheld an Administrative Law judge's decision that Massachusetts Furniture and Piano
Movers Association conspired illegally to restrain competition in Massachusetts' moving industry. The
Order prohibited the association from collective ratemaking and required the group to cancel all tariffs
currently on file with the Massachusetts Department of Public Utilities. The Order prohibited the
association from: (1) providing a forum for members to discuss rates; (2) influencing the rates members
charge or providing non-public information to members about competitors' rate changes; and (3)
maintaining a rate or tariff committee that discussed or formulated rates. In addition, the association was
required to amend its bylaws to conform with the Order.
CONSUMER PROTECTION MISSION
Bristol-Myers Company
The company was ordered to cease superiority and therapeutic claims unless proven by two or more
competent and objective clinical studies. Other provisions of the order prohibit the company from
suggesting its products contain special ingredients when such ingredients are commonly used in competing
products, and from suggesting the analgesic ingredient of a product is not aspirin if, in fact, it is. The
misrepresentations included that Bufferin works twice as fast as plain aspirin, Bufferin is less upsetting
to the stomach, Excedrin is more effective than its leading competitors, Excedrin reduces fever better, and
Excedrin is more effective than any other over-the-counter drug because it contains four ingredients.
Sterling Drug, Inc.
The company was ordered to cease superiority and therapeutic claims unless proven by two or more
competent and objective clinical studies. Other provisions of the order prohibit the company from
suggesting its products contain special ingredients when such ingredients are commonly used in competing
products, and from suggesting the analgesic ingredient of a product is not aspirin if, in fact, it is. Sterling
may no longer claim that its aspirin, Bayer, is tested for quality, purity and freshness against 220 other
brands, and that the tests showed Bayer makes the superior aspirin.

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53

ORDER MODIFICATIONS
COMPETITION MISSION
Hercules, Inc.
The Commission modified a 1970 consent order with Hercules Inc., to eliminate a provision requiring
Hercules to obtain FTC approval before acquiring any assets or stock of Columbian Rope Co. and to
eliminate recordkeeping provisions. The complaint issued with the order alleged that Hercules' loan to
Columbian to purchase rope-making assets in exchange for 34 percent of Columbian stock could reduce
competition in the production of various types of rope. All other remedial provisions of the order have
either been previously deleted or have expired.
U.S. Pioneer Electronics, Inc.
U.S. Pioneer Electronics, Inc. petitioned the Commission to delete the provision in the 1975 order that
prohibited Pioneer's practice of transshipments, which allowed Pioneer to limit the types of retailers, such
as discount outlets, to whom its dealers could sell Pioneer products. The Commission voted to modify
rather than delete the provision, so that Pioneer dealers could continue to transship to retailers who met
specified non-discriminatory standards for product promotion, display and service.
American Medical Association
Under a modified order, the American Medical Association was required to mail a copy of the 1982 FTC
order against it to all member physicians and to affiliated state and local medical associations. In addition,
the order must be published in one edition each of the AMA's newsletter and journal. The AMA
petitioned the Commission to delete the requirement that it send copies of the order to its members by first
class mail.
American Dental Association
Under a pre-existing modification agreement, the FTC relieved the American Dental Association of certain
requirements under a 1982 order which forbade it from prohibiting truthful advertising by member dentists. While the requirement that the Association send its member dentists a letter announcing the Order
was deleted, the Association was still required to publish the order in one edition each of its newsletter

54

FEDERAL TRADE COMMISSION
and journal. In addition, the Commission modified the period during which ADA would be required to
maintain records and file reports with the FTC.

Foremost-McKesson, Inc.
The Commission modified a 1967 consent order by deleting the requirement that Foremost-McKesson
obtain FTC approval before acquiring an interest in any company that manufactures pharmaceutical
preparations or engages in the wholesale distribution of drugs, drug proprietaries, druggists' sundries,
toiletries, housewares or related products.
Occidental Petroleum Corporation
The Occidental Petroleum Corporation petitioned the Commission to set aside or modify the 1974 consent
order which alleged that Occidental and its subsidiary Hooker Chemical Corporation had gained unfair
competitive advantage over their competitors through reciprocal dealing, a practice whereby one company
sells to a second on the condition that the second sells to the first. The order was modified to allow
Occidental to prepare a statistical analysis comparing its purchases with a company to its sales to that
company and also ruled that the order would expire 10 years after its March 1974 issuance. The
Commission denied Occidental's request to vacate the order.
IC Industries Inc.
At the request of IC Industries Inc., the Commission modified a 1973 consent order which charged that
IC's acquisition of Midas-International Corporation lessened competition in the manufacture and sale of
automotive replacement parts and prohibited IC from acquiring any U.S. manufacturer or wholesale
distributor of brake parts without prior FTC approval for ten years. Under the modified order, Midas can
purchase products containing brake friction materials manufactured by Abex Corporation, another IC
subsidiary.
Dahlberg Electronics Inc.
The Commission modified a 1974 consent order against Dahlberg Electronics Inc., a hearing aid
manufacturer, at the request of the company. Under the original order Dahlberg was prohibited from
setting resale prices, telling its dealers which customers they could sell to, which territories they could
service, and preventing its dealers from selling competing products. Dahlberg was permitted to suggest
prices to its dealers, but not to coerce adherence to the suggested price.

ANNUAL REPORT 1983

55

E&J Gallo Winery
The Commission vacated a 1976 consent order that settled charges E&J Gallo Winery used its market
leadership to make it difficult for competitors to obtain effective distribution systems. The order restricted
Gallo's relationships with wholesalers at the distribution level and prohibited the company from restricting
where or how its dealers could operate. The Commission vacated the order to permit Gallo the same
panoply of marketing strategies as its competitors.
Herman Miller, Inc.
The 1967 consent order with Herman Miller, Inc. was modified to allow the office furnishings
manufacturer to establish contracts or agreements under which dealers were restricted from selling
specified product lines to certain customers. The consent order settled charges Miner reduced competition
in the distribution and sale of office furniture by limiting the customers to whom its dealers could sell
Miller's products.
Scott Paper Company
The Commission vacated a 1964 order against Scott Paper Company that settled antitrust charges against
Scott's acquisition of three paper products companies. The vacated order removed the fourth and final
provision which prohibited Scott from acquiring, without prior Commission approval, companies engaged
in the manufacture or sale of sanitary paper products such as toilet tissue, facial tissue, paper napkins,
paper towels or household waxed paper.
Magnavox Company
The Commission modified a 1971 order against Magnavox Company that prevented product transshipping,
the practice of selling to other dealers rather than selling directly to consumers. Although the twelve year
old order continues to prohibit resale price maintenance, the modified order eliminates the restrictions
preventing Magnavox from requiring dealers to sell only Magnavox products and to carry the full product
line.
Sansui Electronics Corporation
The Commission modified a 1975 Order against Sansui Electronics Corporation to allow it to establish
non-discriminatory standards for product promotion, display and service for retailers to whom its dealers
can transship.

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FEDERAL TRADE COMMISSION

Xerox Corporation
The Commission modified a 1975 order which settled a 1973 FTC complaint that Xerox monopolized
office copier patents. Under the modified order Xerox could advertise and promote its copiers more easily
but was required to continue for two years to announce the selling price of its copiers when it announced
it would take orders for the lease of copiers.
Sherwood Electronic Laboratories, Inc.
The Commission reopened and modified a 1975 order against Sherwood Electronic Laboratories, Inc. to
allow it to prevent transshipment of its products to dealers who did not meet reasonable, nondiscriminatory standards of promotion, service and display.
United Audio Products, Inc.
The Commission modified a 1976 Order to allow United Audio Products, Inc. to prevent transshipment
of its products to dealers who did not meet reasonable, non-discriminatory standards of promotion, service
and display.
Nikko Electric Corporation of America
The Commission modified an Order against Nikko Electric Corporation of America allowing the firm to
prevent transshipment of its products to dealers who did not meet reasonable, non-discriminatory standards
of promotion, service and display.
CONSUMER PROTECTION MISSION
GC Services Corporation, et al.
This collection agency had been under a consent order which prohibited it from various practices including
holding debtors' post-dated checks for more than 60 days. Since the order was issued, the law has changed
and the company has shown good faith. The modification removes the 60 day limitation but requires the
company to notify debtors at least three business days in advance of depositing their checks, and allows
debtors to recall unsecured post-dated checks.
AHC Pharmacal, Inc.
This modification to the Commission order removes the requirement that the company disseminate
corrective advertisements. It also allows

ANNUAL REPORT 1983

57

the company to claim that its acne product containing benzoyl peroxide can be effective for treating acne.
However, the company may not claim its product is better than competing brands, or that it can cure acne
unless it has a reasonable basis for the claims.
H & R Block, Inc.
To conform with changes in the Internal Revenue Service regulations, the Commission modified the
requirement in this order that the company obtain an authorization from a customer prior to preparing a
tax return in order to use any information on the return to solicit other business. The company must now
obtain an authorization by the time it finishes the tax return, and it does not have to specify what information will be used. However, the company must still disclose other entities with which it intends to share
the information.
Encyclopaedia Britannica, Inc., et al.
The modifications to the order governing the marketing practices of this company involve changes in the
wording and presentation required in advertisements and sales material. In addition, order provisions
covering restrictions on the use of key words, and required disclosures to prospective employees were
modified.
Fred Meyer, Inc.
Prior to this modification the company had to give customers 10 days after the expiration of a layaway
period to decide whether they wanted to complete layaway payments or obtain a refund. The company
will now give customers 14 days to settle their accounts. This change was requested by the company in
order to simplify their recordkeeping procedures.
Morton-Thiokol, Inc., et al.
Under this modification, the company is no longer required to put extensive warnings in advertisements
for "Morton Lite Salt", as long as it discloses the product contains sodium and consumers are directed to
read the label warning. The company may now also state that the medical profession has found a link
between sodium intake and high blood pressure.

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FEDERAL TRADE COMMISSION

Golden Tabs Pharmaceutical Co., Inc.
The original order prohibited unsolicited mailings of products, and misrepresentations regarding the origin,
quality, and terms of free offers. The modification allows the company to advertise a free product as long
as the terms of the offer are printed close to the coupons consumers must fill out to receive the free
product.
Success Motivation Institute, Inc.
The Commission modified this order to enhance disclosures to prospective purchasers of this company's
franchises. Under the new order, a four year financial disclosure on the number of operating franchises
and their purchase profile from the company must be disclosed.
Sterling Drug, Inc., et al.
The company presented sufficient scientific evidence to warrant a modification in this order. The
company may now represent that "Lysol" disinfectant can reduce the incidence or prevent the spread of
colds by killing cold virus on household surfaces.
Equifax, Inc.
In compliance with a federal appeals court ruling, the Commission modified this order to eliminate
prohibitions against evaluating and rewarding its employees by the amount of adverse information they
gather on consumers.
American Home Products Corp., et al.
The Commission modified its final order against the maker of Anacin in accordance with a ruling by the
U.S. Court of Appeals. A provision prohibiting noncomparative effectiveness or side effect claims for any
over-the-counter drug was deleted. The modified order was subsequently temporarily stayed at the request
of the company.
Flagg Industries, Inc., et al.
This modification removes Flagg from the order which was issued in 1977 against Flagg and Queen Creek
Land and Cattle Corp. In return for being released from the order, Flagg will contribute $3.5 million to
Queen Creek to ensure the order provisions are met. New requirements were also added to ensure future
compliance with the order by Queen Creek.

ANNUAL REPORT 1983

59

Reader's Digest Association, Inc.
Under the modified order, Reader's Digest may now use "simulated checks" and is no longer prohibited
from claiming contestants are "lucky" or have been "especially selected" to win a prize. Certain recordkeeping requirements were also changed. The modifications were based on current evidence that
consumers are no longer misled by such promotional materials.
The Kroger Company
A negotiated settlement between the FTC and Kroger resulted in a 1981 Commission order being modified
to allow the company to conditionally use survey-based, comparison price advertisements. Certain other
provisions of the order were deleted.

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ADVISORY OPINIONS
COMPETITION MISSION
Burnham Hospital
An Advisory Opinion was issued to Burnham Hospital concerning Burnham's exclusive contract with
Prairie Professionals, a group of radiologists, to operate the hospital's radiology laboratory. The Opinion
found that the contract would probably not restrict competition among radiologists. The Opinion also said
that the fact that Burnham's decision to enter the contract was made in the interest of the hospital and was
not the result of efforts by the hospital's medical staff to restrict competition among physicians also
suggested that it would not harm competition.
Resource Analysis & Management Group
An Advisory Opinion issued to the Resources Analysis and Management Group discussed its plan to
collect price and other information from operators of high-cost natural gas wells, which had been
deregulated by the Natural Gas Policy Act of 1978, for use in contract redeterminations between natural
gas producers and purchasers. The Commission did not object to the proposed program, subject to certain
qualifications set out in the Opinion, and said that disclosure of individual well data to persons not
involved in the production or sale of natural gas who required the data solely for research or study
purposes would be lawful if they agreed not to disclose the data to others.
Santa Fe Energy Company
An Advisory Opinion issued to the Santa Fe Energy Company discussed the use of intermediaries to obtain
and supply natural gas price provisions and other data for use in contract redeterminations. Subject to
certain qualifications, the Commission did not object to the use of intermediaries such as the Resource
Analysis & Management Group, to supply information regarding prices being paid by pipelines buying
gas of similar quality and quantity from competitors in the same producing area.

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FEDERAL TRADE COMMISSION

Rhode Island Professional Standards Review Organization
The Commission issued an Advisory Opinion to the Rhode Island Professional Standards Review
Organization concerning its peer review program designed to advise consumers and physicians on the
necessity of proposed medical treatment. The Opinion stated that the review program did not appear to
involve price fixing, an agreement to avoid competition or other conspiracy in restraint of trade. The
Commission further noted that while the program may promote competition, the organization should avoid
using the program in ways which discriminate against innovative competitors.
Health Care Management Associates
The Commission issued an Advisory Opinion to Health Care Management Associates, a New Jersey
consulting firm. The Opinion stated that its proposed program, designed to monitor the organization,
financing and delivery of health care services of a limited number of health care professionals, would not
violate federal antitrust laws. The "Cooperating Provider Program" planned by Health Care Management
Associates also would provide for the sale of health care services to insureds covered by third party payers
under contract with the Association. The Commission advised that the program was procompetitive on
balance, because it would generate competition between cooperating providers and other local providers
and increase competition among third party payers.
American Academy of Ophthalmology
The FTC issued an Advisory Opinion to the American Academy of Ophthalmology, an organization of
physicians specializing in medical and surgical eye care. The Opinion explained that the Academy's
proposed code of ethics, which was designed to protect and benefit patients of member ophthalmologists
who are members of the Academy, would not violate the Federal Trade Commission Act or any other
statutes enforced by the Commission. The Opinion cautioned against possible misuse of four rules in the
proposed code that could cause antitrust concerns if not enforced objectively and fairly.
Phosphate Rock Export Association
The Commission issued an Advisory Opinion to the Phosphate Rock Export Association concerning a
proposed barter program. The Association requested Commission approval of its plan to annually
exchange

ANNUAL REPORT 1983

63

on behalf of its members up to 400,000 metric tons of phosphate rock for sulfur with the Governments of
Mexico and Poland. Under the plan, the Association would arrange for the distribution of the sulfur to
its participating member firms based on each member's proportionate contribution of the exported
phosphate rock. The Opinion stated that the Commission approved the Webb-Pomerene association's
limited participation in the barter program as a legitimate "act done in the course of export trade" and that
it would not constitute an unlawful restraint of trade in United States markets or have a significant
potential negative effect on foreign commerce.
The Coca-Cola Company
The FTC issued an Advisory Opinion to the Coca-Cola Co. stating that the divestiture of Doric Foods
Corporation to Doric Holdings, Inc., a newly-formed joint venture, would constitute compliance with the
consent agreement provisionally accepted in 1982. The Opinion is conditioned upon the issuance of a
final Commission order against Coca-Cola. The consent agreement required Coca-Cola to divest its Doric
Foods subsidiary to an acquirer approved in advance by the Commission.
The American Podiatry Association
The Commission's staff issued an Advisory Opinion to the American Podiatry Association at the request
of the Association and one of its members, the Podiatry Society of Virginia. The Opinion discussed the
Association's proposed peer review program and its guidelines to be used by any of the component review
committees representing 8200 doctors of pediatric medicine in the U.S. The program establishes a
mechanism whereby patients, insurers or podiatrists may request peer advisory determinations by the
member societies to resolve disputes regarding pediatric fees or use of services. The Opinion stated that
the proposed peer review would not violate the antitrust laws but, could instead benefit consumers by
giving the medical community incentives to practice in a more cost-conscious manner.

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APPELLATE COURT REVIEW
OF COMMISSION ORDERS
American Home Products Corp.
On December 3, 1982, the United States Court of Appeals for the Third Circuit affirmed and enforced in
principal part the Commission's order against American Home Products Corp., prohibiting deceptive practices in connection with advertising of over the counter analgesics and other O-T-C drug products.
Grolier, Inc.
On February 10, 1983, the United States Court of Appeals for the Ninth Circuit affirmed and enforced the
Commission's order against Grolier, Inc., which prohibited various deceptive practices in the sale of
encyclopedias.
Montgomery Ward & Co., Inc.
On November 9, 1982, the United States Court of Appeals for the Ninth Circuit affirmed the Commission's
finding that Montgomery Ward had violated the Commission's Rule on Pre-Sale Availability of Written
Warranties by its failure to provide at least one warranty binder per sales floor, and reversed the
Commission's holding that Wards had violated the Rule through failure to maintain at least one sign per
department announcing the availability of warranty information. The Court also vacated the Commission's
order.
Russell Stover Candies, Inc.
On September 29, 1983, the United States Court of Appeals for the Eight Circuit reversed the order of the
Commission, which had held that Russell Stover's announced policy of refusing to continue dealing with
any retailer who sells its product at less than retail prices designated by Stover resulted in a vertical price
fixing agreement that was illegal per se. The court of appeals held that under United States v. Colgate,
a simple refusal to sell to customers who will not sell at prices suggested by the seller is permissible under
the Sherman Act.

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SUPREME COURT REVIEW
OF COMMISSION ORDERS
Borden
On May 23, 1983, the Supreme Court granted Borden's petition for a writ of certiorari and remanded the
case to the Sixth Circuit for entry of an order vacating the Sixth Circuit's decision and remanded the case
to the Commission for entry of a consent agreement with Borden. The Commission had recommended
this course of action in response to Borden's petition for certiorari.
Francis Ford, Inc.
On November 8, 1982, the Supreme Court denied, by a vote of 7-2, the Commission's petition for a writ
of certiorari, thereby letting stand a holding of the United States Court of Appeals for the Ninth Circuit
that the Commission had exceeded its authority when it proceeded by adjudication rather than rulemaking
to challenge certain allegedly unfair practices of Francis Ford.
Herbert R. Gibson, Sr., et al.
On April 4, 1983, the Supreme Court denied the request of Herbert R. Gibson, Sr. and others for a writ
of certiorari, thereby letting stand the opinion of the United States Court of Appeals for the Fifth Circuit,
which had affirmed and enforced the Commission's order prohibiting repetition of unlawful boycotts and
payments of unlawful brokerage in violation of Section 2© of the Clayton Act as amended by the
Robinson-Patman Act.

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INTERVENTIONS
A. Statements Presented to Other Agencies
Tennessee Department of Public Health
FTC joint Bureau Comments filed with the Board for Licensing Health Care Facilities of the State of
Tennessee, supporting making hospital privileges available to qualified expanded-practice nurses in
appropriate circumstances because it would help ensure that such nurses are able to offer the services they
have been trained and authorized by state law to provide.
Postal Rate Commission
FTC joint Bureau Comments stating that postal rate changes might be more efficient if a series of rate
changes could be established at one rate hearing.
ICC
ICC oral presentation in ICC Ex Parte No. 346, Sub. No. 8, Exemption from Regulation - Boxcar Traffic.
MCRSC
Letter from James C. Miller III to the Honorable Robert Packwood, Chairman, Motor Carrier Ratemaking
Study Commission (with copies to other MCRSC Commissioners) commending the MCRSC staff report
on collective ratemaking, and recommending that antitrust immunity should be eliminated for all aspects
of collective ratemaking.
FCC
FTC joint Bureau Comments submitted in FCC Ct. Dkt. No 82-434, Cable Cross Ownership.
California Public Utilities Commission
Comments submitted in Case No. 10368, Order to Show Cause Why Collective Rate Making Should Not
Be Abolished (Decision No. 82, 11 045).

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FEDERAL TRADE COMMISSION

ICC
FTC joint Bureau Comments submitted in ICC Ex Parte No. MC-166, Pricing Practices of Motor Common
Carriers of Property Since the Motor Carrier Act of 1980.
ICC
FTC joint Bureau Supplementary ICC Comments on the Exemption of Motor Contract Carriers From
Tariff Filing Requirements submitted in ICC Ex Parte No. MC-165.
Delaware Legislature
Commission letter to Representative Roger Roy, House of Representatives, State of Delaware, opposing
bill that would have limited freedom of auto dealers to locate in Delaware.
FCC
FTC joint Bureau Comments submitted in FCC BC Dkt. No. 82-345, Amendment of 47 C.F.R. 73.658(j);
The Syndication and Financial Interest Rule.
DHHS
Commission letter to Carolyne Davis, Administrator of Health Care Financing Administration, on DHHDS
Matter BPP-519-P, on proposed revisions to the Conditions of Participation for Hospitals in Medicare and
Medicaid.
OSHA
Commission letter to Thorne G. Auchter, Assistant Secretary of Labor, on OSHA Docket S-105,
regulations relating to testing laboratory accreditation.
DOC
Commission Prehearing Brief submitted to the Department of Commerce in the matter of Certain
Softwood Lumber Products from Canada Countervailing Duty Proceedings.

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71

FCC
FTC joint Bureau reply comments submitted in FCC BC Dkt. No. 82-345, Amendment of 47 C.F.R.
73.658(j); The Syndication and Financial Interest Rule.
OMB
Commission letter to OMB on the Department of Transportation's drafts of the Truck Deregulation Act
of 1983 and the Surface Freight Forwarder Deregulation Act of 1983.
ITC
Letter to ITC regarding Portland Hydraulic Cement from Australia and Japan, Inv. Nos. 731-TA-108, 109.
(Case involving cement dumping).
DOC
Commission comments to DOC regarding Export Trade Certificates of Review.
ITC
Brief submitted by the FTC supporting the position, contrary to petitioners' views, that the ITC should not
exclude from the domestic color television industry the production facilities owned by Japanese, Korean,
and Taiwanese Corporations.
Postal Rate Commission
ECOM Proceeding
a. Notice of the FTC's intention to intervene as a limited participant in the matter of Electronic Computer
Originated Mail (E-COM) Rate Classification Changes, 1983, Docket No. R83-1.
b. FTC joint Bureau Comments submitted in PRC Docket No. R83-1, Response to Motion for Waiver,
opposing modification of the test period requiring E-COM provided by the USPS to fully recover its
costs during fiscal year 1984.
C. FTC joint Bureau comments (Docket No. R83-1) to the PRC on the competition issues inherent in the
E-COM Rate and Classification changes.

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FEDERAL TRADE COMMISSION
d. FTC staff comments (Docket No. R83-1) to the PRC: Objections and Responses to the USPS's
Interrogatories to the FTC.

Motor Carrier Ratemaking Study Commission
Testimony by James C. Miller III on collective ratemaking in the intercity bus industry, including
submission of FTC staff analysis, "Collective Ratemaking in the Intercity Bus Industry."
F.A.A.
FTC comments submitted in the FAA Notice of Proposed Rulemaking 77-19C concerning parts
manufacturer approvals.
FERC
Staff statement before the Federal Energy Regulatory Commission on the purchasing practices of interstate
natural gas pipelines.
ICC
FTC joint Bureau comments submitted in Ex Parte No. MC-165 (Sub-1), Motor Contract Carriers of
Property; proposal to allow issuance of permits authorizing industry-wide service.
Virginia Health Commissioner
Staff Comments to the Health Commissioner of the State of Virginia concerning a request for a certificate
of public need by a home health care firm (Total Patient Care).
S.E.C.
Commission letter to the Securities and Exchange Commission (S.E.C.) commenting favorably on the
SEC's proposed rule (22n-6), allowing mutual funds, underwriters and brokers to vary the sales
commissions that investors pay when purchasing mutual fund shares.
FERC
FTC submission of Motion for Leave to Intervene in Central Illinois Light Co. v. Panhandle Eastern Pipe
Line Co., Federal Energy Regulatory Commission (FERC) Dkt. No. RP 82-105-000.

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Federal Reserve Board
FTC joint Bureau comments submitted to the Federal Reserve Board commenting on the proposed
modification of Regulation B which implements the Equal Credit Opportunity Act.
B. Statements Presented to Congressional Committees
and State Legislature Committees
Delaware House Committee on Revenue and Finance
Testimony by Andrew Strenio for Commission before Delaware House Committee on Revenue and
Finance on Delaware Senate Bill No. 26, Motor Vehicle Franchising Act.
Hawaii House Consumer Protection and Commerce Committee
Commission letter to Hawaii House Consumer Protection and Commerce Committee opposing S. B. 904
"A Bill for an Act Relating to Fair Dealership Practice."
California Senate
Testimony by Harrison Sheppard (San Francisco Regional Office) before California Senate on S.B. 440
"An act to amend Section 651 of the Business and Professions Code, relating to professional advertising."
California Assembly Health Committee
Testimony by Ronald Bond to the California Assembly Health Committee on AB 1925 and 1926, bills that
would foster competition in the delivery of vision care, by repealing several statutes that limit forms of
commercial practice by optometrists and opticians.
House Judiciary Committee
Testimony by James C. Miller III before the Subcommittee on Monopolies and Commercial Law of the
House judiciary Committee approving H.R. 878, the Shipping Act of 1982.
Oregon Legislature
Testimony by Dennis McFeely (Seattle Regional Office) before the Oregon Legislature opposing H.B.
2961 which would authorize exclusive territories for wine distributors.

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House Energy and Commerce Committee
Comments submitted by the Commission opposing H.R. 1234, the "Fair Practices in Automotive Products
Act," which proposes certain "domestic content" levels for cars and trucks sold in the U.S. and opposing
H. R. 3113, "The Domestic Automobile Industry Revitalization Act," which proposes certain protectionist
features for the U.S. auto industry.
Senate Committee on Banking, Housing and Urban Affairs
Testimony by Commissioner George W. Douglas on the future direction of the banking and financial
services industries.
California State Assembly
Testimony by Harrison Sheppard for the San Francisco Regional Office before the California State
Assembly on S.B. 440, "An act to amend Section 651 of the Business and Professions Code relating to
professional advertising.
FERC
Staff statement before the Federal Energy Regulatory Commission on the purchasing practices of interstate
natural gas pipelines.
Senate Finance Committee
Commission comments on proposed revisions to the medicare and Medicaid programs contained in S.643,
the "Health Care Financing Amendments of 1983." The comments relate to several sections of the bill
(including accreditation) that may affect competition and consumer protection in the health care services
and prepayment markets.
House Committee on Public Works and Transportation
Commission Testimony by James C. Miller III before the Subcommittee on Aviation of the House
Committee on Public Works and Transportation opposing H.R. 2053, the "Air Travelers Security Act of
1983."
Commerce, Transportation & Tourism Subcommittee of the House Energy & Commerce Committee
Commission comments opposing enactment of H.R. 3591, the "Sales Representation Contractual Relations
Act" because of the bill's potential for creating anticompetitive effects.

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C. Reports Released to the Public
Report on Entrepreneurial Trends in Health Care Delivery
Consultant report (by Institute for Health Policy Studies, University of California, San Francisco)
analyzing the development of retail dentistry and freestanding ambulatory services.
Report on Airport Access Problems: Lessons Learned from Slot Regulation by the FAA
Bureau of Economics Staff Report to the FTC analyzing FAA regulation of the number of landings per
hour (slots) at certain airports and proposing the substitution of a market approach to slot allocation.
D. Amicus Curiae Briefs
Court of International Trade
Request for permission to file briefs in carbon steel proceedings amicus curiae, before Court of
International Trade.
Court of International Trade
Brief by the FTC as amicus curiae before the Court of International Trade on countervailing duties on
imported carbon steel.

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ECONOMIC WORKING PAPERS
Assessing the Competition Potential of Health-Care Markets, Judith R. Gelman, October 1982.
Measuring the Value of Life From Consumer Reactions to New Information, Pauline M. Ippolito and Richard
A. Ippolito, October 1982.
Market Definition in Antitrust Analysis: Comment, Robert A. Rogowsky and William F. Shughart II, Revised
October 1983.
The Impact and Relevance of the 1911 General Electric Lamp Case, Robert P. Rogers, November 1982.
Market Share and Profitability: A New Approach, Malcom B. Coate, January 1983.
The English Economy Following the Black Death, Judith R. Gelman, Revised November 1982.
Raising Rivals' Costs, Steven C. Salop and David T. Scheffman, January 1983.
Innovation and Market Structure: A Survey, Morris E. Morkre, April 1983.
Capital-Biased Subsidies, Bureaucratic Monitoring, and Bus Scrapping, Mark W. Frankena, April 1983.
Market, Firm and Economic Performance: An Empirical Analysis, Stephen Martin, June 1982.
The Application Of Tobit and Probit Estimation to Aggregate Data. Frederick I. Johnson, June 1983.
The Imprecision Of Traditional Welfare Measures In Empirical Applications, Frederick I. Johnson, June 1983.
Causality Tests For Market Extent Applied to Petroleum Products, Margaret E. Slade, June 1983.
Successful Efforts And Full Cost Accounting As Measures Of The Internal Rate Of Return For Petroleum
Companies, Marvin Rosenberg, June 1983.

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The Regressive Nature of Civil Penalties, Phyllis Altrogge and William F. Shughart II, June 1983.
Warranties, Tie-Ins, And Efficient Insurance Contracts: A Theory And Three Case Studies, Jeffery A.
Eisenach, Richard S. Higgins and William F. Shughart II, June 1983.
Intra-Firm Subsidization and Regulation: Do Profits Cover Losses, Or Do Losses Justify Profits, And Does
It Matter?, Oliver Grawe, June 1983.
Mergers and Market Share, Dennis C. Mueller, June 1983.
A Theory Of Cost And Intermittent Production: Some Antitrust Implications, Michael T. Maloney, June 1983.
The Usefulness Of Accounting Profit Data: A Comment On Fisher And McGowan, William F. Long and
David Ravenscraft, June 1983.
Forms Of Competition And Contracting In The Private Marketing Of Collective Goods, Earl Thompson,
August 1983.
The Measurement Of Firm Cost Curves In The Steel Industry, Robert P. Rogers, September 1983.
Tie-Ins Involving Bundles With Fixed Proportions Demand, Judith R. Gelman, 1983.
The Price and Profit Effects of Horizontal Merger: A Case Study, David M. Barton and Roger Sherman,
August 1983.
Age Discrimination In Credit Markets, Samuel L. Myers, Jr., May 1983.

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MISCELLANEOUS ECONOMIC POLICY PAPERS
Competition and Collusion In Electric Equipment Markets. An Economic Assessment, David Lean, Jonathan
Ogur, and Robert Rogers, July 1982.
Retrospective study of the famous electrical equipment price-fixing conspiracy of the 1950's. Concluded that
the conspiracy had raised prices in some markets, and that despite the remedies handed out in the case,
facilitating practices allowed some prices to be raised after the case was concluded.
The Determinants of Persistent Profits: An Empirical Study, Dennis Mueller, June 1983.
Concluded that persistent profits among large U.S. corporations stem from firm-specific factors such as
patents, rather than from barriers to entry.
Airport Access Problems: Lessons From Slot Regulation By The FAA: An Economic Policy Analysis, Donald
Koran and Jonathan Ogur, May 1983.
Estimated potential gains to consumers from using market system for allocating landing slots instead of the
present administrative system. Current losses estimated in the range of tens of millions of dollars per year.
Review Of The Economic Basis For Broad-Based Horizontal Merger Policy, Paul Pautler, forthcoming in
Antitrust Bulletin, Fall, 1983.
Part of the analysis performed in connection with merger guidelines, this article reviews much of the
theoretical and empirical research produced since 1968 on the economics of horizontal mergers. Concludes
that the evidence underlying the pre-1968 consensus on merger policies was not as strong, consistent, or
unambiguous as had been thought.
When Would A Merger Creating A Monopoly Lead To A Lower Price?, Walter Vandaele, Alan Fisher, and
Robert Lande, forthcoming in California Law Review, December, 1983.
Identifies the cost and other conditions under which a merger transforming an industry from competitive to
monopoly pricing could bring a decrease in marginal costs sufficient to lead the new monopoly price to be as
low or lower than the pre-merger competitive price.

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LINE OF BUSINESS PROGRAM RESEARCH PAPERS
Sales-At-Risk: The Importance of Multi-market Contracts in American Manufacturing, Robert Feinberg,
December 1982.
Market Share, Concentration and Profits: Intra-Industry And Inter-Industry Evidence, William F. Long,
December 1982.
Economies of Integration, David J. Ravenscraft, December 1982.
R & D And Declining Productivity Growth, Frederick M. Scherer, May 1983.
Capital Costs and Profitability, John T. Scott and George Pascoe, September 1983.
The Usefulness Of Accounting Profit Data: A Comment On Fisher And McGowan (Franklin Fisher and John
McGowan, On The Misuse Of Accounting Rates Of Return To Infer Monopoly Profits, William F. Long and
David J. Ravenscraft, American Economic Review, March 1983.
An Alternative Interpretation Of Seller Concentration, Capital Intensity, and Profitability, John T. Scott and
George Pascoe, August 1983.
Firm Versus Industry Variability in R & D Intensity, John T. Scott, R & D, Patents, and Productivity, NBER
Conference Volume, Forthcoming September 1984.
Domestic Profit Advantages Of Multinational Firms, Anita Benviganti, August 1983.
International Transfer Pricing by U.S. Manufacturing Firms, August 1983.
Growth By Diversification: Entrepreneurial Behavior In Large-Scale United States Enterprises, Frederic M.
Scherer, August 1983.
Aggregate Production Function Results Using FTC Line Of Business Data, Memorandum from Meta Systems,
Inc. to Ed Leviton, EPA, June 1983.
Patent Equation Results From The FTC Line Of Business Data, Memorandum from Meta Systems, Inc. to Ed
Leviton, EPA, July 1983.


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