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1989
ANNUAL
REPORT
U.S. FEDERAL TRADE COMMISSION
WASHINGTON, D.C.
Annual
Report
of the FEDERAL
TRADE
COMMISSION
For the Fiscal Year Ended
September 30, 1989
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402
FEDERAL TRADE COMMISSION
DANIEL OLIVER, Chairman*
JANET D. STEIGER, Chairman**
TERRY CALVANI, Commissioner
MARY L AZCUENAGA, Commissioner
ANDREW J. STRENIO, JR., Commissioner
MARGOT E. MACHOL, Commissioner***
DONALD S. CLARK, Secretary
__________
* From April 21, 1986 to August 10, 1989.
** Sworn in August 11, 1989.
*** From November 29, 1988 to October 24, 1989.
ii
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: 80202-2393
Boston, Massachusetts
Room 1184
10 Causeway Street
Zip Code: 02222-1073
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
150 William Street
13th Floor
Zip Code: 10038
Cleveland, Ohio
Suite 520-A
668 Euclid Avenue
Zip Code: 44114
San Francisco, California
901 Market Street
Suite 570
Zip Code: 94103
Dallas, Texas
Suite 500
100 N. Central Expressway
Zip Code: 75201
Seattle, Washington
28th Floor - Federal Building
915 Second Avenue
Zip Code: 98174
iii
LETTER OF TRANSMITTAL
July 13, 1990
The Honorable Dan Quayle
President of the Senate
United States Senate
Washington, D.C. 20510
The Honorable Thomas Foley
The Speaker of the House
House of Representatives
Washington, D.C. 20515
Dear Mr. President and Mr. Speaker:
It is a pleasure to transmit the seventy-fifth Annual Report of the Federal Trade Commission covering
its accomplishments during the fiscal year ended September 30, 1989.
By direction of the Commission.
Janet D. Steiger
Chairman
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FEDERAL TRADE COMMISSION
1989 ANNUAL REPORT
Table of Contents
page
Summary.................................................................................................................................................1
Maintaining Competition Mission..........................................................................................................3
Premerger Notification.....................................................................................................................4
Mergers and Joint Ventures..............................................................................................................4
Horizontal Restraints........................................................................................................................8
Distributional Restraints.................................................................................................................10
Single Firm Violations...................................................................................................................10
Antitrust Policy Analysis...............................................................................................................11
Consumer Protection Mission...............................................................................................................11
Advertising Practices......................................................................................................................11
Marketing Practices........................................................................................................................13
Credit Practices..............................................................................................................................17
Service Industry Practices..............................................................................................................18
Enforcement...................................................................................................................................21
Office of Consumer and Business Education.................................................................................24
Economic Support..........................................................................................................................25
Economic Activities..............................................................................................................................25
Antitrust..........................................................................................................................................25
Consumer Protection......................................................................................................................26
Regulation......................................................................................................................................26
Executive Direction, Administration and Management, and
Regional Offices.............................................................................................................................26
Appendix
Part II (Investigative Stage) Consent Agreements
Accepted and Published for Public Comment
Maintaining Competition Mission.................................................................................................31
Consumer Protection Mission........................................................................................................34
Part II (Investigative Stage) Consent Orders Issued
Maintaining Competition Mission.................................................................................................35
Consumer Protection Mission........................................................................................................39
v
Part III Administrative Complaints
Maintaining Competition Mission.................................................................................................42
Consumer Protection Mission........................................................................................................45
Part III (Adjudicative Stage) Consent Agreements
Accepted and Published for Public Comment
Maintaining Competition Mission.................................................................................................47
Consumer Protection Mission........................................................................................................47
Part III (Adjudicative Stage) Consent Orders Issued
Maintaining Competition Mission.................................................................................................48
Consumer Protection Mission........................................................................................................49
Initial Decisions
Maintaining Competition Mission.................................................................................................49
Consumer Protection Mission........................................................................................................50
Final Commission Orders
Maintaining Competition Mission.................................................................................................50
Consumer Protection Mission........................................................................................................52
Order Modifications
Maintaining Competition Mission.................................................................................................53
Consumer Protection Mission........................................................................................................55
Preliminary and Permanent Injunctions
Maintaining Competition Mission.................................................................................................56
Consumer Protection Mission........................................................................................................58
Civil Penalty Actions
Maintaining Competition Mission.................................................................................................69
Consumer Protection Mission........................................................................................................70
Economic Reports Completed..............................................................................................................74
Economic Issues Series.........................................................................................................................76
Working Papers.....................................................................................................................................76
Miscellaneous Economic Policy Papers...............................................................................................77
Consumer and Competition Advocacy.................................................................................................78
Table of Cases Listed in Appendices....................................................................................................98
vi
SUMMARY
The Federal Trade Commission enforces a variety of federal antitrust and consumer protection laws. The
Commission seeks to ensure that the nation's markets function competitively, and are vigorous, efficient, and
free of undue restrictions. The Commission also works to enhance the smooth operation of the marketplace
by eliminating acts or practices that are unfair or deceptive. In general the Commission's efforts ate directed
to stopping actions that threaten consumers' opportunities to exercise informed choice. Finally, the
Commission undertakes economic analysis to support its law enforcement efforts and to contribute to the
policy deliberations of the Congress, the Executive Branch, other independent agencies, and state and local
governments.
In addition to out its statutory enforcement responsibilities, the Federal Trade Commission advanced the
policies underlying Congressional mandates through cost-effective non-enforcement activities, such as
consumer education. This report itemizes the Commission's accomplishments in fiscal year 1989.
MAINTAINING COMPETITION
The Bureau of Competition and the Commission's ten regional offices assisted the Commission in
fulfilling its mission of maintaining competition in the U.S. economy. In the merger enforcement area, the
Bureau of Competition experienced a 5 percent increase over fiscal year 1988 figures of transactions reported
pursuant to the Premerger Notification Program, and the staff reviewed and proposed modifications to the
reporting rules to reduce the premerger reporting burden and to reduce incentives to violate the rules. In
fiscal 1989, the Commission reviewed mergers m many sectors of the economy, the most notable were in the
petroleum, health care, and food industries. Measures were taken to ensure compliance with Commission
orders requiring divestitures and prior approvals of acquisitions.
Outside the merger enforcement area, the Commission continued efforts to eliminate private and public
restraints on competition by reviewing licensed occupations, investigating and challenging boycotts, and
reducing the economic restrictions on the practice of innovative health care providers. The Commission
devoted considerable attention to maintaining competition in the health, care industry and to challenging
anticompetitive agreements among competitors, especially competitive restraints involving professionals.
In the compliance area, the Bureau of Competition staff continued or completed work on civil penalty
litigation, petitions to modify orders, and applications for
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FEDERAL TRADE COMMISSION
approval of divestitures and acquisitions from entities already subject to Commission orders. Along with
its enforcement activities, the agency promoted competition through other methods, including, when invited,
advocacy before state and federal bodies of regulatory approaches that would foster rather than impair
competition.
CONSUMER PROTECTION
In fiscal 1989, the Commission challenged as false, misleading, or unsubstantiated, a number of
advertising claims which presented risk of substantial harm to consumers. As Part of this effort, the
Commission accepted a number of consent agreements while issuing administrative complaints and pursuing
administrative litigation in other matters.
The Commission also conducted investigations of alleged fraudulent or deceptive tactics in the sale of
items. The Commission continued its participation, together with state and local law enforcement authorities,
in a nationwide computer network for consumer complaints involving telemarketing fraud. In addition, the
Commission worked to ensure that warranty information was understood and made available to consumers
prior to sale and that promises made under the"warranties were honored.
The Commission obtained civil penalties or consumer redress in several actions charging violations of
Commission rules. The Commission amended the appliance labeling rule, adopted modifications to the
Door-To-Door Cooling Off Rule, and began proceedings to consider expanding the Mail Order Rule to cover
telephone sales and other telemarketing technologies.
In fiscal 1989, the Office of Consumer and Business Education produced three business booklets
concerning credit statutes and the Used Car Rule. In addition, the Office developed or revised 20 consumer
publications on topics such as using credit cards, car rental, dance studio contracts, and program length
commercials, and the staff distributed more than 2.5 million copies of consumer and business publications.
CONSUMER AND COMPETITION ADVOCACY
A number of federal and state legislatures and regulatory bodies sought the Commission's advice on
proposed legislation or regulatory matters. Topics addressed included advertising, antitrust, communications,
health care, occupational licensing, rent control and transportation. The staff also filed amicus curiae briefs
in the circuit courts and the Supreme Court concerning issues related to the agency's missions.
ECONOMIC ANALYSIS
In fiscal 1989, Federal Trade Commission economists continued to
ANNUAL REPORT 1989
3
make policy recommendations and to produce reports on topics of interest to the public. While direct support
of enforcement, particularly antitrust, activities absorbed the bulk of the resources of the Bureau of
Economics in fiscal 1989, the Bureau was also responsible for analyzing data and publishing information
about the nation's industries, markets, and business firms. The Bureau conducted a number of studies on a
broad range of antitrust, consumer protection and regulatory topics. This work resulted in published reports
on sham litigation, mergers in the US petroleum industry, and health claims policy. These major reports
provide insight into the effects of government regulation on competition and consumer welfare.
ADMINISTRATION AND MANAGEMENT
A number of organizational changes during fiscal 1989 were designed to improve the delivery of ADP
support services to Commission staff. The Automated Systems Division implemented three new central
records systems, and also completed work on a utility to enable personal computer users to print documents
on any printer attached to the Commission's local area network. The staff also improved internal controls
over property, information, and telephone usage.
The Commission's budget declined in real terms in fiscal 1989, resulting in the expenditure of about 10
percent fewer workyears than in fiscal 1988. The fight budget required a reduction-in-force ("RIP") during
the year and virtually no hiring activity. In addition to RIF-related activities, the Division of Personnel
devoted much of its attention to an alternative work schedule program and revision of the agency's merit
promotion plan. Two regional offices moved to new offices in fiscal 1989, and work was accomplished on
a number of renovations and improvements to the Headquarters building.
MAINTAINING COMPETITION MISSION
The Maintaining Competition Mission is charged with preventing unfair methods of competition and
promoting competition. The major goal of this mission is to detect and eliminate antitrust violations,
including collusion, anti-competitive mergers, predatory single firm conduct, injurious vertical arrangements,
and other anticompetitive practices in the private sector. The Bureau of Competition is primarily responsible
for conducting the activities of this mission. Activities are grouped into the following program areas:
premerger notification, mergers and joint ventures, horizontal restraints, distributional restraints, single firm
violations, and antitrust policy analysis. The premerger notification program investigates possible violations
of the
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FEDERAL TRADE COMMISSION
reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act and administers the operation
of the statutory premerger notification rules. The other program areas-review violations of the antitrust laws
in the petroleum, health care, transportation and food areas as well as suspected violations among licensed
occupations. In addition, the Bureau provides procompetitive analysis and comment in government
proceedings that affect competition.
PREMERGER NOTIFICATION
The Premerger Notification Program administers the Hart-Scott-Rodino Antitrust Improvements Act of
1976, which requires that certain mergers, acquisitions, and joint ventures must be reported to the
Commission prior to their consummation.
During fiscal year 1989, 2,883 transactions were reported under the program, an increase of 5 percent
over fiscal year 1988. The Commission opened 35 investigations to issue "requests for additional
information" relating to 42 of those transactions. hi addition, the Premerger Notification staff responded to
approximately 17,000 inquiries regarding application and interpretation of the Hart-Scott-Rodino Act and
the premerger rules.
In August 1989, the Commission published the second Premerger Notification Sourcebook, an update
of the 1987 reference manual that compiles in a single volume the text of the Hart-Scott-Rodino Act, the
Commission's premerger notification rules including revisions and amendments, all rule interpretations
issued formally by the Commission, and various other documents relevant to the premerger notification
program.
At the request of the Commission, the Department of Justice filed a complaint and settlement in one
matter involving a violation of the Hart-Scott-Rodino Act. In the Great Atlantic & Pacific Tea Co., Inc., the
complaint charged that A&P structured its acquisition of Waldbaum, Inc., as an acquisition by a general
partnership for the purpose of avoiding the notification and waiting requirements of the Hart-Scott-Rodino
Act. The complaint charged that the substance of the transaction was an acquisition of Waldbaum by A&P.
A&P agreed to settle the charges by paying a civil penalty of $3 million. This is the largest civil penalty
obtained for a violation of the Hart-Scott-Rodino Act.
MERGERS AND JOINT VENTURES
This program monitors and investigates mergers, acquisitions, and joint ventures that may reduce
competition, tend to create monopoly, or cause other harm to consumers. The Commission has the authority
to seek to enjoin mergers preliminarily under Section 13(b) or the FTC Act
ANNUAL REPORT 1989
5
when the Commission deems such action appropriate to prevent violations of the antitrust laws. In fiscal year
1989, the Commission authorized seven preliminary injunction actions: General Electric/Union Carbide,
Textron/Avdel, BOC/Varian Associates; Red Food Stores/Kroger, U.S. Can/Armstrong Industries, Autoclave
Engineers/Tylan Corp.; and Elf Aquitaine/Pennwalt. In carry-over matters, the parties to two acquisitionsMcNesson-Alco and, McKesson/Northwest abandoned the transactions after the Commission had authorized
injunction actions in fiscal 1988.
In the General Electric/Union Carbide, BOC/Varian Autoclave Engineers/Tylan, U.S. Can/Armstrong
matters, the transactions were abandoned when the Commission voted to seek injunctions. Shortly after the
Commission authorized the staff to seek injunctive relief in Elf Aquitaine/Pennwalt - but before the filing
of the Commission's preliminary injunction application in federal court the Commission entered into a
consent agreement pursuant to which Elf Aquitaine agreed to divest Pennwalt's polyvinylidene
fluoride/vinylidene fluoride plant in Thorofare, New Jersey. In Textron/Avdel, the Co on obtained from the
district court a stipulated injunction and hold-separate agreement, pursuant to which Textron win hold
separate the business of Avdel and a court-appointed trustee will oversee the operation of Avdel pending
completion of the administrative proceedings. The courts denied the Commission's application for injunctive
relief in Red Food Stores/Kroger.
The Commission also issued administrative complaints in three merger cases in fiscal 1989. In Hoechst
Celanese Corp., the Commission's complaint alleges that the acquisition may substantially lessen competition
in the market for acetal, a type of engineering resin. In Textron/Avdel, the complaint claims that the
transaction may lessen competition in markets for aerospace blind rivets and non-aerospace structural blind
rivets. The complaint in Promodes, S.A. (the administrative litigation pertaining to the Red Food/Kroger
acquisition) charges that the acquisition may h competition among Chattanooga, Tennessee, supermarket
firms.
Meanwhile, administrative litigation continued (or was concluded) in a number of merger cases in fiscal
1989. In Owens-Illinois/Brockway, involving Owens-Illinois' acquisition of Brockway, Inc., an Administrative Law Judge found that the transaction was likely substantially to lessen competition in the production and
sale of glass containers, and ordered divestiture of the acquired Brockway assets plus certain additional
relief. The judges decision was appealed to the Commission by Owens. During the pendency of respondent's
appeal before the Second Circuit in B.F. Goodrich/Diamond Shamrock - in which the Commission had found
a violation in the market for vinyl chloride
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FEDERAL TRADE COMMISSION
monomer-Goodrich and the Commission reached a settlement providing for the divestiture of a VCM plant
different from the one originally ordered divested. Earlier in the same case, the Commission and Occidental
Petroleum Corp. had entered into a stipulation that provided for a continuing feedstock arrangement.
Following the Seventh Circuit's affirmance, the administrative complaint in Illinois Cereal Mills/Elders was
withdrawn from adjudication as to Illinois Cereal for the purpose of negotiating a consent agreement.
Although the companies have abandoned the proposed acquisition, the matter remains in adjudication as to
Elders. In MidCon/United Energy Resources, the Commission dismissed the count in the complaint that
dealt with offshore pipelines, upon a finding that the transaction was unlikely to result in anticompetitive
effects.
A number of consent orders and agreements have flowed from the merger program in fiscal 1989. The
Commission issued a consent order requiring divestiture and prior approval in West Point-Pepperell, Inc.,
which involved the competitive effects in the sheet and towel markets caused by West Point-Pepperell's
acquisition of J.P. Stevens & Co. A consent order issued in the KKR/RJR Nabisco matter required divestiture of certain assets in the catsup, packaged nut, and Oriental food businesses. In Sun Co./Atlantic
Petroleum, the consent order required the respondent to divest gasoline terminals and related retail marketing
assets in Williamsport, Pa., and Binghamton, N.Y. In PepsiCo/General Cinema, the Commission's order
required divestiture of overlapping operations in Staunton, Va., and Broward County, Fla. The order in
Panhandle Eastern/Texas Eastern requires divestiture of overlapping natural gas pipeline operations in the
Gulf Coast area and other relief, including the appointment of a trustee to oversee the divestiture process.
Litigation in PPG/Swedlow, which involved a transaction between firms in the aircraft transparency market,
was concluded as to PPG with a consent order following the parties' abandonment of the acquisition. The
order requires PPG to obtain prior Commission approval before making certain acquisitions. Charges against
Swedlow were dismissed. Litigation of the attempted acquisition by Pacific Resources, Inc., of certain
Hawaiian assets of Shell Oil Co. was settled by a consent agreement requiring Pacific to obtain Commission
approval before making certain acquisitions.
In addition to these consent orders, the merger program yielded a number of proposed consent
agreements in fiscal 1989 that were placed on the public record for comment. In Arkla/TransArk Pipeline,
the proposed order would require the divestiture of the TransArk Pipeline or, if the Commission were to
permit it, the divestiture of Arkla's interest in any. other pipeline in the same market. In MTH
Holdings/Grand Union, the proposed order requires the divestiture of 16 stores in 12
ANNUAL REPORT 1989
7
cities and towns in Vermont and New York State, imposes a moratorium on future acquisitions, and provides
for other relief. The agreement negotiated in Elf Aquitaine/Pennwalt provided for, the divestiture of a
PVDF/VF2 plant in Thorofare, New Jersey, and other relief. Finally, in the litigation against Coca-Cola
Bottling Southwest, the Commission reached a consent agreement with the Dr Pepper/Seven-Up-Company,
providing that Dr. Pepper/Seven-Up will take no action that would interfere with the Commission's ability
to fashion relief against Coca-Cola Bottling.
There was also considerable activity involving Commission orders in the merger area. B.P. Goodrich
Co. requested Commission approval of the divestiture of a vinyl chloride monomer plant in Calvert City, Ky.,
to Sterling Chemicals Inc.; more recently, Goodrich filed a substitute proposal involving the divestiture of
the Calvert City plant to a different acquirer. In L'Air Liquide S.A., the Commission modified the consent
order to permit the consolidation of L'Air Liquide with Big Three Industries and also approved L'Air
Liquide's proposal to divest certain interests in the production of argon from the Geismar plant in Louisiana.
The Commission also approved an acquisition pursuant to the order in Great Lakes Chemical; meanwhile,
Great Lakes filed a still-pending request for approval of another acquisition. In Flowers Industries, the
Commission granted prior approval to an acquisition involving Winn-Dixie; another request by Flowers for
prior approval of an acquisition is pending before the Commission. Flowers also requested that the
Commission reopen and modify the order so as to eliminate the prior approval requirement.
In other matters, the Commission approved two proposed divestitures in InterNorth, Inc., and prevailed
in a federal court action concerning a third party's right of first refusal in property subject to the divestiture
order. The plaintiff's appeal of that federal court ruling is pending in the U.S. Court of Appeals for the Fifth
Circuit. In Sun Co./Atlantic Petroleum the Commission approved Sun's divestiture of the Binghamton
terminal and related assets to Amerada Hess and the divestiture of the Williamsport properties to subsidiaries
of Coastal Corp. The Commission also granted prior approval of an acquisition in General Electric. In
LaFarge Canada Inc., the Commission approved a proposed acquisition and also modified the order in part.
In Cooper Industries, Inc., Cooper agreed to a stipulated final judgment providing for, inter alia, a civil
penalty of $100,000 after making an acquisition without the prior Commission approval required by tire
order. In MidCon/United Energy, MidCon agreed to a stipulated judgment providing for a civil penalty of
$100,000 for failure to divest by the date set forth in a consent order. In West Point-Pepperell, the
Commission denied the respondent's. application for an extension of the time within which to
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FEDERAL TRADE COMMISSION
divest certain sheeting facilities; moreover, West Point-Pepperell filed-but ultimately withdrew - a petition
to reopen and modify the order that sought Commission authorization to divest the Columbus plant in lieu
of the Hanna-Pickett and Abbeville plants. Finally, in KKR/RJR, the respondent asked for Commission
approval of the proposed divestitures of the Chun King Oriental food business and of the Fisher Nut
business.
HORIZONTAL RESTRAINTS
In fiscal 1989, the Commission continued to devote substantial resources to eliminating anticompetitive
agreements among competitors, especially in markets for professional and health care services. In
implementing its program against anticompetitive horizontal restraints, the Commission has used various
means, including advocacy before regulatory agencies and state legislatures, cooperative efforts resulting in
voluntary compliance, consent orders and litigation. This year the Commission issued administrative
complaints in two cases: Robert G. Koski, M.D., involved charges that the doctor conspired with other
physicians in Michigan to prevent a clinic from offering services that would increase competition among
health care practitioners in the area; Chain Pharmacy Association of New York State involved allegations
that a trade association and several pharmacies engaged in an illegal boycott of the state's prescription plan
in an effort to increase the program's reimbursement rate for prescriptions.
The Commission issued its final order in four cases. In Detroit Auto Dealers, involving allegations that
competing motor vehicle dealers in Detroit conspired to close their businesses during certain week nights
and weekends, the dealerships were ordered to increase their hours of operation. The complaint against Ticor
Title Insurance Co. and four other title insurance companies was, upheld when the Commission ruled that
the companies illegally conspired to fix prices on search and examination services through their participation
in rating bureaus in New Jersey, Pennsylvania, Connecticut, Wisconsin, Arizona and Montana. In the New
England Motor Rate Bureau case, the Commission upheld a 1986 Administrative Law Judge's decision that
the rating bureau illegally fixed prices by collectively filing rates to be charged for the interstate
transportation of freight in Massachusetts and New Hampshire. The Commission dismissed the complaint
against the Motor Transport Association of Connecticut, ruling that the association's practice of filing
intrastate transportation rates for property shipped by motor common carrier was exempt from the federal
antitrust laws under the state action doctrine. The Commission found that collective rulemaking was
protected by the laws and action of the state of Connecticut.
The Commission accepted for public comment or issued consent
ANNUAL REPORT 1989
9
agreements in eight matters involving collective or coercive activities by professionals. In Certain Sioux
Falls Obstetricians, a consent agreement settled charges that obstetricians in South Dakota engaged in
collective, coercive activities that interfered with the residency program of the University of South Dakota
School of Medicine. Related to that consent agreement, the Commission accepted a proposed consent
agreement in Lee M. Mabee, M.D., to settle charges in an administrative complaint that he also participated
in the illegal boycott of the residency program of the school of medicine. The New York State Chiropractic
Association entered into a consent agreement under which it win not conspire to deal with third-party payers
on collectively determined terms. Brooks Drug, Carl's Drug Co., and Genovese Drug Stores, three pharmacy
chains related to the Chain Pharmacy case, separately entered into consent agreements settling charges that
they restrained competition among pharmacy firms by boycotting a third-party prescription benefit plan.
Under a final consent agreement in Memorial Staff of Dickinson County Memorial Hospital which was
related to the Robert G. Koski, M.D., matter, doctors in Dickinson County, Michigan, agreed not to interfere
with medical facilities that compete with the private practice of physicians. The Iowa Chapter of the
American Physical Therapy Association agreed not to restrict physical therapists from working for
physicians, and fourteen physicians in Huntsville, Texas, agreed not to conspire against health maintenance
organizations in Eugene M. Addison, M.D.. Under terms of a consent agreement, the Cleveland Automobile
Dealer's Association agreed to rescind its closing policy that limited showroom hours among competing car
dealers in the Cleveland area.
Four consents accepted for comment were pending at the close of the fiscal year: American Institute of
Certified Public Accountants involved allegations that the institute restrained competition by restricting fee
arrangements and truthful advertising. Texas Board of Chiropractic Examiners and the Structural Engineers
Association of Northern California, involved allegations that both organizations illegally restrained
competition by restricting truthful advertising; Oklahoma State Board of Veterinary Medical Examiners
involved allegations that veterinarians were restricted from entering into certain business arrangements with
non-veterinarians.
During fiscal 1989, the Commission's staff conducted numerous investigations of allegedly
anticompetitive regulations of state licensing boards and private professional and trade associations. Such
regulations can have the purpose or the effect of fixing or stabbing prices or reducing output, thus causing
substantial injury to consumers. A number of these investigations have been closed after the board, upon
consultation with Commission staff, voluntarily eliminated regulations
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FEDERAL TRADE COMMISSION
imposing horizontal restraints. The Commission's investigations involved competition among pharmacists,
veterinarians, accountants, funeral service providers, engineers and architects.
The Commission's staff also investigated allegations of efforts by health care providers collectively. to
coerce higher fees from third-party payers or to prevent competition from allied professionals or alternative
delivery systems, restrictions on advertising and other forms of competition by a wide variety of trade and
professional associations, and allegations of the misuse of government processes to disadvantage
competitors.
In addition, during fiscal 1989, the Commission's staff provided advisory opinions, comments and
guidance to regulatory agencies and private groups to ensure that their regulations or activities do not impose
unreasonable horizontal restraints. These advocacy activities dealt with various economic sectors, including
health care, marketing and delivery, certificate-of-need regulation in the health care field, trucking regulation,
taxicab regulation, pre-need funeral legislation, and public accounting legislation. Finally, the Commission
filed amicus briefs in Nurse Midwifery Assoc. v. Hibbett and Bolt v. Halifax Hospital. Both briefs dealt with
legal issues that commonly arise in cases involving horizontal restraints in the health care sector.
DISTRIBUTIONAL RESTRAINTS
During fiscal 1989, the Commission continued to investigate, and has initiated new inquiries into,
possible unlawful restraints upon the distribution of goods or services in the marketplace. The types of
restraints examined by the Commission include unlawful refusals to deal, dealer terminations, interference
with a competitor's sources of supply, and agreements that exclude, restrict or impede a rival from competing
in the open market.
The Commission staff is litigating challenges to the pricing practices of eight major book publishers;
reviewing the public comments on the .proposed revisions to the Fred Meyer Guides, which advise
businesses regarding discriminatory advertising and promotional allowances, and monitoring for violations
of the Robinson-Patman Act, which prohibits price discrimination and promotional allowances or discounts
unless made available on a proportionally equal basis to all purchasers for resale.
SINGLE FIRM VIOLATIONS
During fiscal 1989, the Commission has continued investigations into possible abuses of market power,
including possible abuse of the patent process and other practices that may increase the costs of competitors
ANNUAL REPORT 1989
11
and thereby injure competition. The Commission staff is examining additional circumstances in which
nonprice predation may be an effective anticompetitive tool. Additionally, Commission staff considers all
complaints it receives alleging predatory pricing although such complaints seldom entail violation of
applicable legal standards.
ANTITRUST POLICY ANALYSIS PROGRAM
During fiscal 1989, the Bureau of Economics undertook a number of research projects in support of the
antitrust mission of the Commission. In addition, the Bureau completed a number of other projects and
released staff reports on (1) the cost of trade restrictions on textiles, steel, and automobiles, (2) mergers in
the US petroleum industry, and (3) sham litigation.
CONSUMER PROTECTION MISSION
The Consumer Protection Mission acts to ensure that the marketplace is free of unfairness, fraud and
deception, and serves as the nation's advocate of competition and consumerism. To achieve these objectives,
the Mission has undertaken several initiatives, including: increasing efforts to inform and educate consumers
of their rights, working more closely with business groups to increase compliance with the law; developing
approaches that focus on specified market failures; fashioning innovative remedies to advance consumer
welfare, implementing a sound program of law enforcement actions; and strengthening the Commission's
program of filing comments before various federal and state agencies in support of competition and
consumers.
Mission activities are grouped into five program areas; Enforcement, Marketing Practices, Advertising
Practices, Credit Practices, and Service Industry Practices. These program areas are supported by the Office
of Consumer and Business Education and the Economic and Consumer Policy Analysis program.
ADVERTISING PRACTICES
Eight advertising cases resulted in consent agreements accepted by the Commission. General Nutrition
Corp. is required to pay a total of $600,000 for research, and is prohibited from making false and
unsubstantiated claims about its products. The consent order settles charges that GNC made false and
unsubstantiated claims that its diet supplement, "Healthy Greens," was effective in reducing the risk of
cancer. The $600,000 will be divided equally among the American
12
FEDERAL TRADE COMMISSION
Diabetes Association, the American Cancer Society, and the American Heart Association for research in
nutrition, obesity, or physical fitness.
Associated Mills was charged with having no basis for claiming that its Pollenex Bottled Water Maker
Reverse Osmosis System could remove certain hazardous organic chemicals from tap water for a year. The
company agreed to have substantiation for future similar claims. Coleco Industries agreed not to
misrepresent the availability of its computer-related products. The company was charged with falsely
claiming that additional modules for its "My Talking Computer" were available, when the modules were not
yet for sale.
Alamo Rent-A-Car agreed to settle charges that its operators failed to disclose to consumers the existence
and amount of airport surcharges and mandatory fuel charges when consumers inquire about possible rental
of Alamo's vehicles. To settle similar charges, the Commission accepted a consent agreement with General
Rent-A-Car. The company was also charged with failing to inform consumers of the car models they are
renting even though, under General's vehicle classification system, consumers could receive a smaller
automobile than expected. General agreed to disclose orally all mandatory, charges to every consumer who
inquires about its prices, and to disclose to consumers the car models they would receive under the car size
classification the consumer selects.
The Commission gave final approval to a consent agreement with JS&A Group, and its president and
owner, Joseph Sugarman. The consent group prohibits the company from claiming that its program-length
ad for sunglasses, called BluBlockers, is an investigative consumer program that conducted an objective
investigation of the sunglasses the company sells. The order also prohibits JS&A from misrepresenting that
any paid advertisement is an independent consumer or news program.
Two additional consent agreements were accepted by the Commission. An-Mar International, makers
of Solar Gold suntanning devices, agreed to settle charges it falsely advertised that its products provided
health benefits and that consumers did not risk harmful side effects, such as skin cancer. The consent
agreement prohibits the company from misrepresenting the safety of its products. Body By Design, a Boston
health club, was charged with falsely claiming that its electric muscle stimulation treatments produced the
same effects as exercises. Under the consent agreement, accepted subject to final approval, the club and
owners, agreed not to misrepresent any fitness program.
The Commission issued an administrative complaint charging Campbell Soup Co. with making deceptive
and unsubstantiated claims in advertisements for its soups. According to the complaint, the ads link the low
fat, low cholesterol content of its soups with a reduced risk of some forms of heart disease, but fail to
disclose that the soups are high
ANNUAL REPORT 1989
13
in sodium and that diets high in sodium may increase the risk of heart disease.
Complaints against two companies selling baldness cures were filed in federal district court. California
Pacific Research was charged with falsely advertising "New Generation" baldness preventative and remedy.
The court issued a preliminary injunction against the company. Pantron I was charged with falsely
advertising that "Helsinki-Formula" products will cure or prevent baldness. Both companies used various
means of advertising, including 30-minute program-type television commercials that suggested that the
performance claims were accurate and supported by scientific substantiation The Commission requested that
the court issue preliminary and permanent injunctions and order the defendants to pay refunds to consumers.
An Administrative Law Judge upheld charges that Kraft, Inc. falsely advertised that its Kraft Singles
cheese slices contained as much calcium as five ounces of milk and contain more calcium than do most
imitation slices. The ALJ ordered the company not to misrepresent the nutrient content of its individually
wrapped slices of cheese in the future.
The Commission accepted an Administrative Law Judge's finding that Norelco falsely advertised that
its Clean Water Machine would make tap water clean or cleaner, when it knew that the machine added a
potentially hazardous chemical to the water. The company is prohibited from misrepresenting the
performance of the Clean Water Machine or any other electric-powered consumer appliance.
The Commission ruled that Removatron International Corp., the largest maker of high-frequency,
tweezer-type hair-removal devices, made false and deceptive claims that its devices permanently remove hair
and lacked a reasonable basis for making such permanency claims. The Commission issued an order
prohibiting the company from making unsubstantiated claims about its product and requiring it to possess
clinical testing as substantiation for future permanency claims.
Comment was sought on proposed amendments to regulations under the Comprehensive Smokeless
Tobacco Act of 1986 to remove the exception for utilitarian items. The Court of Appeals had ruled that, the
Commission's exemption was improper. Therefore, staff requested the Commission to seek comments on
ways to amend the regulation to provide warnings on utilitarian items.
MARKETING PRACTICES
In the Marketing Practices program, two Franchise Rule cases resulted in over $3 million ordered
returned to consumers. Engage-A-Car, an auto leasing franchise, agreed to pay $1.5 million into a redress
fund to settle charges of misrepresenting its profitability. The KIS Corp., which sold one-hour photo
finishing equipment and franchises, agreed to pay
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FEDERAL TRADE COMMISSION
$1.55 million to settle charges it made false claims and failed to provide required disclosures to prospective
buyers.
In addition, four complaints charging violations of the Franchise Rule were filed in federal district court.
Temporary restraining orders and asset freezes were issued in all four cases, including: Investment
Developments and its affiliated corporations and principals, marketers of amusement game machine
franchises; American Safe Marketing, seller of distributorships to sell fire extinguishers; 7-Day Appraisal
Services, seller of real estate appraisal franchises, and National Business Consultants, seller of business
opportunities for business consulting services.
Civil penalties of $120,000 were ordered from four companies charged with violating the Funeral Rule.
The Rule requires that funeral providers give detailed and accurate information about prices and legal
requirements to persons who are arranging funerals. Lucas Funeral Home agreed to pay $20,000, and
Errington Memorial Chapel and the James H. Turner Funeral Home will each pay $10,000 in civil penalties
to settle charges.
The Commission won its first contested lawsuit brought under the Funeral Rule. A federal district court
ruled that Dudley M. Hughes, Jr., owner of Dudley Hughes Funeral Company, must pay $80,000 in civil
penalties for violating the Rule. Hughes was also permanently prohibited from future violations. This was
the largest civil penalty amount imposed in a case involving the Funeral Rule.
The Commission accepted a consent agreement, subject to final approval, with Robert Lewis Wilks, the
former owner of the Barbers Funeral Home. The complaint charged Wilks with failing to provide his
customers with goods and services they selected and paid for. Wilks agreed to stop doing business as a
funeral service provider, or having any business relationship with any entity selling or offering to sell funeral
goods or services to the public.
The Commission accepted a consent agreement with Batesville Casket Co., the nation's largest casket
maker, settling charges the company made false claims about the length of time its caskets win keep-out air,
water, and other gravesite substances.
Administrative complaints were issued against The Hensley Group, a timeshare promoter, and Outdoor
World Corporation, a campground promoter. The Commission also filed complaints in federal court against
the two companies, and David and Annette Defusco, who owned a company, Lead Marketing, that marketed
recreational property. The Commission alleged that the defendants represented in promotional mailings that
named consumers had won one or more specified prizes, when the consumers had not won the specified
prizes. A federal court issued preliminary injunctions against the DeFuscos, Lead Marketing,
ANNUAL REPORT 1989
15
and Outdoor World, prohibiting them from misrepresenting that consumers have won specified prizes. The
Hensley Group agreed to a stipulated injunction that contains the same prohibitions.
The Commission issued an administrative complaint charging TK-7 Corp, and its president, Moshe Tal,
with making false and unsubstantiated advertising claims concerning the performance characteristics of
gasoline additives. According to the complaint, the company claimed that its products can improve engine
performance by extending engine life, and increasing power, octane, and mileage.
Mytel International a telemarketer of photocopy supplies, agreed to pay $250,000 to settle charges it
deceptively marketed supplies directly and through other sales companies. Mytel agreed to stop doing
business with telemarketers that make misrepresentations in their sales presentations.
Traditional Industries was charged with making false claims concerning the quality and value of
photographic processing packages it sold to consumers for $300 to $1,500. In a consent decree filed in
federal court, the company agreed to settle the charges by changing its sales practices and by permitting some
consumers to cancel their contracts.
A complaint was filed charging Case Equipment Co. and its president with making false and deceptive
claims in the marketing of machines that allegedly copy color pictures onto textiles and other surfaces. At
the Commission's request, a federal court issued a temporary restraining order forbidding further
misrepresentations, and froze the defendants' assets.
Vaughn Management was charged with falsely telling consumers they would receive an "award" for no
cost, when in fact consumers had to pay a "processing fee" of $24.50 to $26.50 to obtain their awards. The
Commission also alleged that defendants failed to tell consumers who paid the processing fee that they were
required to spend hundreds of dollars more to use the airfare vouchers they received as awards. A federal
court issued a temporary restraining order halting such misrepresentations and also froze the defendants'
assets.
Complaints were filed in federal district court charging two Florida telemarketers with misrepresenting
the capabilities of water purifiers they sell and the return or replacement policies for the purifiers. U.S.
Consumer Promotions (USCP) was also charged with falsely telling consumers they would receive an award
without making a purchase and failing to disclose to consumers that they would have to pay substantial
additional sums of money to obtain the award. The court issued temporary restraining orders against USCP
and Environmental Protection Systems and froze the defendants' assets. Responding to an increase in
marketing abilities in the sale of home-water purifiers, the Commission also prepared a brochure, with
assistance from EPA, to help consumers
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FEDERAL TRADE COMMISSION
determine their need for a water treatment unit; the brochure explains what various types of units can do and
alerts consumers to deceptive sales practices that unscrupulous sellers may employ.
Ujena, Inc., a swimsuit seller, was charged with not paying promised refunds on mail order or telephone
sales, in a timely manner. The Commission accepted a consent agreement in which the company agreed to
pay refunds no later than 10 days after receiving requests. The Commission also accepted a consent
agreement with Montgomery Ward settling charges that Ward's employees made false and unsubstantiated
claims in selling appliance service contracts.
A consent agreement, accepted subject to final approval, with Budget Rent-A-Car settled charges it failed
to disclose to prospective renters that it did not inspect automobiles subject to recall notices within a
reasonable period of time, and if appropriate, make the necessary repairs. Cooper Rand Corp. was charged
with falsely claiming that its lighter-to-lighter automobile battery chargers could restart auto batteries as
quickly as jumper cables. In a consent agreement the company agreed not to make false claims about its
products and to notify consumers of the limitations of the "Auto Starter."
Richard J. Wiley agreed to settle charges that he used deceptive practices to sell distributorships for
energy-saving devices and home burglar alarms. Under a consent judgment, Wiley agreed not to
misrepresent any business ventures he offers for sale in the future.
The United States Circuit Court of Appeals for the 7th Circuit affirmed the trial court's decision and
judgment of $6.5 million for consumer redress in FTC v. Amy Travel.
In an Advance Notice of Proposed Rulemaking, the Commission sought public comment on whether it
should revise its Franchise Rule to encourage more franchisors to provide cost and earnings information to
potential purchasers and to eliminate potential inconsistencies in federal and state requirements governing
franchise sales. In addition, the Commission granted Saturn Corporation, a wholly-owned subsidiary of
General Motors, an exemption from the Rule.
The Commission also published an Advance Notice of Proposed Rulemaking seeking public comment
on its Rule Governing Informal Dispute Settlement Procedures, also called Rule 703. Under the MagnusonMoss Warranty Act, the Commission is responsible for encouraging the use of informal dispute settlement
mechanisms as an alternative to court action. The Commission also requested comment on a petition
concerning the Rule by two industry groups, and a Memorandum of Opposition to the petition filed by the
National Association of Attorneys General.
Public comment was sought on a petition by the State of Texas for statewide exemption from the Funeral
Rule. Under the Rule, states can
ANNUAL REPORT 1989
17
apply for an exemption if they have existing laws that cover the same business practices as the Commission
rule.
CREDIT PRACTICES
Complaints filed in federal district courts resulted in $3,756,000 ordered returned to consumers and
$36,000 in civil penalties paid to the U.S. Treasury. BankCard Travel Club has agreed to pay up to $2.5
million in consumer redress to settle charges that it deceptively billed customers for membership fees. In
addition, one defendant, Lee Franklin, will pay $40,000 into the redress fund. The company and three
individual defendants also agreed to permanent injunctions.
Action Credit Systems and five other defendants settled charges that they engaged in deceptive acts and
practices in connection with the marketing and sale of credit repair service. Action Credit and two
defendants are required to pay $1.2 million into a consumer redress fund. Miguel de la Campa agreed to pay
$11,000 and Nathan S. Levy agreed to pay $5,000 for use as redress or disgorgement. The money paid by
the defendants may be used to pay redress to consumers or, if redress is not feasible, may be paid directly
to the U.S. Treasury. All defendants, except Mr. Levy, were permanently barred from selling or providing
credit card procurement or credit improvement services, or from assisting others in doing so.
Two former officials of Credit-Rite, James Thomas Gray Sr. and Donald Gray, have agreed to settle
charges that they misled consumers about the company's services. Under the consent decree, they are
prohibited from misrepresenting their ability to improve consumers' credit bureau reports, and must honor
any refund promises they make. As a result of an action brought by the New Jersey U.S. Attorney's office,
both defendants were ordered to pay restitution, and James Thomas Gray was sentenced to serve a prison
term.
Debt Collectors, Inc. was charged with illegally harassing consumers with threats of imminent court
action, arrest, garnishment, incarceration, and deportation, with using obscene and profane language, and
with threatening them with violence, in violation of the Fair Debt Collection Practices Act. The company
agreed to enter into a consent decree and to pay $155,000 in civil penalties to settle charges.
Green Tree Acceptance, one of the country's largest companies financing mobile homes and recreational
vehicles, agreed to pay $115,000 in civil penalties to settle charges it violated federal credit laws. The
company was charged with discriminating against the elderly by requiring larger down payments from them.
The consent decree also settled 1986 charges that the company did not tell consumers why they were denied
credit, in violation of the disclosure requirements of Equal Credit Opportunity and Fair Credit Reporting
Acts.
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FEDERAL TRADE COMMISSION
John Wanamaker Philadelphia, a department store, agreed to pay a $90,000 civil penalty to settle charges
it illegally discriminated against some married women who applied for credit, in violation of the Equal Credit
Opportunity Act. Wanamaker also agreed not to violate the Act in the future.
A complaint filed in federal district court charged Credit Repair, Inc. with misleading consumers by
falsely and deceptively claiming that it could substantially improve their credit records and by failing to
honor its 100 percent money-back guarantee. The Commission requested that the court order defendants to
pay consumer redress and to permanently prohibit them from the challenged practices.
American Credit Services was charged with misrepresenting its credit establishment and credit
improvement services in a complaint filed in federal district court. The Commission is seeking a permanent
injunction enjoining the company from such misrepresentations in the future and to obtain redress for
consumers.
The Commission accepted a consent agreement, subject to final approval, with Heilig-Meyers Co.
settling charges the company understated its annual percentage rates to consumers in five states. Heilig
offers installment contracts to finance the purchase of furniture that it sells. Under the agreement, Heilig
agreed to calculate and disclose accurately the APRs that it discloses in connection with future extensions
of consumer credit.
The Commission initiated a review of its Holder In Due Course Rule to determine what impact it has on
small businesses. The Rule requires sellers to include specific language in sales contracts and loan agreements when consumers finance their purchases. The Commission also terminated a proceeding to amend
the Holder Rule by extending it to cover third-party creditors.
The Commission staff issued its Commentary on the Fair Debt Collection Practices Act. The purpose
of the commentary is to replace nearly 1,000 pages of informal staff interpretations. The Act regulates
certain activities of debt collectors and prohibits a variety of unfair, deceptive, or abusive practices.
SERVICE INDUSTRY PRACTICES
Law enforcement actions taken under the Service Industry Practices program resulted in several orders
being entered in federal district court, including judgments totaling over $12.7 million.
The Commission previously charged Federal Sterling Galleries with misrepresenting the authenticity and
investment value of the Salvador Dali art work they offered for sale. In fiscal year 1989, a federal court
granted the Commission's motion for summary judgment against the remaining individual defendant and
issued an order for permanent
ANNUAL REPORT 1989
19
injunction and $4.6 million in consumer redress. The order enjoins the defendant from future
misrepresentations in connection with the sale of art work or any other investment offering.
In the case of Rainbow Enzymes, defendants Roy Standridge and Jimmy Standridge agreed to settle
charges that they engaged in unfair and deceptive practices in connection with the recruitment of "licensed
submanufacturers" to make an ingredient that was allegedly used to make a patented enzyme cleaner. Roy
Standridge agreed to pay $20,000 into a consumer redress fund, and a company controlled by him paid in
$70,000. Jimmy Standridge agreed to pay $25,000 in consumer redress. The settlements also contained
injunctive relief against future misrepresentations.
Dr. Cecil B. Jacobson, who ran the Reproductive Genetic Center Ltd., agreed to settle charges that he
misrepresented the likelihood that his patients would become pregnant as a result of his treatments and that
women who underwent his infertility treatments had, in fact, become pregnant. Under a consent decree,
Jacobsen agreed to pay up to $250,000 in consumer redress and also agreed to a permanent injunction
forbidding future misrepresentations relating to his infertility practices.
Rare Coins of Georgia, and three other defendants, agreed to pay $150,000 in consumer redress to settle
charges they overstated the quality of coins they sold to telemarketers for resale to the public for investments.
The settlement also prohibits future misrepresentations about the value of coins and other investments they
sell. The action against this supplier halted a nationwide fraud, potentially saving consumers millions of
dollars.
A complaint was filed in federal district court charging Certified Rare Coin Galleries with deceptively
marketing purportedly rare coins as low-risk, liquid, high-yield investments. The court issued a temporary
restraining order with an asset freeze and appointed a receiver for Certified.
Numismatic Certification Institute, and its principals, Steve Ivy and James Halperin, agreed to settle
charges that its representations and failures to disclose information misled consumers as to the value of coins
certified by the company. An affiliate, Heritage Capital Corporation, also agreed to settle charges that it
provided substantial assistance to a coin retailer, Certified Rare Coin Galleries (CRCG), knowing that CRCG
was misrepresenting the security and profit potential of its coins to investors. Under the settlement,
defendants agreed to a permanent injunction, and Heritage and NCI agreed to contribute $1.2 million into
a consumer redress plan for CRCG's customers.
Bruce M Abrash, an officer of Numismatic Funding Corp., agreed to settle charges that he
misrepresented the grade and investment value of silver coins he sold to consumers through telephone and
mail order
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FEDERAL TRADE COMMISSION
sales. A judgment was entered against Abrash in the amount of $125,000, plus a cash payment of
approximately $20,000 from the liquidation of certain assets.
Nancy Murphy, an officer of Lynn Murphy & Co., settled charges that she engaged in unfair and
deceptive acts in the sale of rare gold coins and silver and platinum bullion for investments. A complaint
was filed against the company and three individual defendants in 1988. Mrs. Murphy agreed to an
injunction, and also agreed to "fully cooperate" with the Commission in preparation for future trials and to
testify if necessary.
A federal judge entered permanent injunctions against Lynn Murphy and Company, Lynn Murphy and
Brad Kaye prohibiting them from misrepresenting gold and bullion investments. The court also awarded the
Commission a judgment of $6.3 million to redress consumers who bought investments from the defendants.
At present, the defendants have no known assets with which to satisfy the judgment.
A federal district court issued preliminary injunctions against Pannos Mining Co. and three other
companies as a result of an action filed by the Commission. The defendants and four individuals were
charged with a bogus investment scheme in which consumers were likely to lose their entire investment.
Pannos Mining offered investors deferred delivery contracts for gold and silver at prices substantially below
the current market price. The Commission is seeking permanent injunctions and redress for consumers who
invested in the project.
The Commission charged Security Rare Coins, a New York firm that sells coins for investment, with
misrepresenting the value and investment potential of its coins, over grading them by at least one grade, and
failing to honor its buy-back- policy. The court issued a temporary restraining order and a limited asset
freeze against Security and its president, James J. Duggan.
A complaint was filed in federal district court charging Uni-Vest Financial Services and five individual
defendants with misrepresenting to consumers the risk of investing in precious metals they offered. The
Commission also charged that the company failed to follow clients' instructions to sell, or not to sell, their
investments. The Commission asked the court to issue a permanent injunction blocking future unfair or
deceptive acts or practices and to order the defendants to pay refunds to consumers.
Continental Communications was charged with misleading potential investors in connection with its
marketing of an application preparation service for the Federal Communications Commission's lottery of
licenses to build and operate cellular telephone systems in Rural Service Areas. A federal court ordered the
defendants to stop misrepresenting the investment potential of participating in the lottery. The court also
froze
ANNUAL REPORT 1989
21
defendants' assets in an attempt to secure refunds for consumers at the end of the court case, and appointed
a temporary receiver to take over the corporate defendant.
The Commission filed a complaint in federal district court against Magui Publishers and Pierre Marcand
charging them with supplying bogus Dali art prints to retailers throughout the United States and overseas.
The court issued a temporary restraining order stopping the challenged practices and also froze defendants'
assets and appointed a temporary receiver.
A complaint was filed in federal district court charging Axiom III Corp. with marketing a bogus
investment scheme in which consumers were likely to lose their entire investment. Axiom offered deferred
delivery contracts for gold to investors across the country. The court issued a temporary restraining order
against the company and the other defendants, and froze their assets. The court also appointed a temporary
receiver for Axiom and the other companies charged in the complaint.
A federal court has sentenced Wayne Pedersen, a former official of Schoolhouse Coins, to three months
in federal prison for criminal contempt of a court-ordered asset freeze. The Commission charged that
Pedersen withdrew funds from a bank account, sold various properties, and otherwise violated the freeze
order. Pedersen pled guilty to the charges.
The Commission issued the Ophthalmic Practices Rule prohibiting certain state restrictions on
optometrists' commercial practices. The Rule invalidates four kinds of state. restrictions, including those that
ban optometrists from having offices in shopping centers. The effective date of the Rule was stayed as a
result of appeals filed by a number of state boards, private associations, and state attorney general offices.
Other activities under the program included the disbursement of $2 million from the Alaska Land
Leasing settlement fund to defrauded consumers. Several matters were in litigation during the fiscal year:
Overseas Unlimited (the sale of job placement services), Security Rare Coin and Bullion (sale of rare coins),
U.S. Oil and Gas (sale of services relating to the Bureau of Land Management lottery for oil and gas rights),
and Austin Galleries (sale of art).
ENFORCEMENT
Civil penalties amounting to $365,000 were ordered in fourteen actions brought under the Enforcement
program. In a complaint filed in federal court, the Ronby Corp., the company that franchises the Fred Astaire
Dance Studios, was charged with violating a 1964 Commission order by failing to provide certain
cancellation and refund rights to students. Under a consent decree, Ronby agreed to pay $105,000 in civil
penalties and is prohibited from violating the order in the future. The
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FEDERAL TRADE COMMISSION
order with Ronby was also modified by the Commission. The modified order gives students significantly
increased protection by providing them with absolute cancellation and refund rights.
SILO, Inc. was charged with illegally removing EnergyGuides from appliances it sold, in violation of
the Energy Policy and Conservation Act and the Appliance Labeling Rule. SILO agreed to pay a $45,000
civil penalty, under a consent order. This was the first Commission enforcement action of both the Rule and
the Act.
Milcon Industries, which does business as Blue Ridge Insulation, was charged with misrepresenting the
amount of insulation it installed in residential and commercial buildings, in violation of the R-Value Rule
and the FTC Act. To settle the charges, Milcon agreed to install additional insulation for certain past
customers. It also agreed to pay $10,000 in civil penalties, unless 50 percent of the affected consumers
participate in the redress program.
World Products was charged with violating the Mail Order Rule by failing to notify consumers of
delayed shipments and failing to pay timely refunds. Under a consent agreement, the company agreed not
to violate the Rule in the future and to pay a $10,000 civil penalty. Three officers and owners of
Northeastern Software were also charged with violating the Mail Order Rule. Under a consent judgment,
a $10,000 civil penalty will be paid and the defendants will be prohibited from violating the Rule and from
misrepresenting the time periods within which they ship merchandise ordered by telephone. A complaint
was filed against High Tech Advertising, a seller of record albums and various other merchandise, charging
violations of the Mail Order Rule. The Commission is seeking civil penalties and preliminary and permanent
injunctions against the defendants.
Nine companies agreed to pay civil penalties to settle charges of violating the Used Car Rule which
requires dealers to display on each used vehicle offered for sale to consumers a window stickers called the
"Buyers Guide" containing warranty information and other important disclosures. Five of the companies also
were charged with violating the Warranty Disclosure Rule or the Magnuson-Moss Warranty Act, which
require retailers to provide specified warranty information in a single document.
Civil penalties of $30,000 were paid by Shelly Cars, $25,000 was paid by Eastside Motors, Goodman
Buick paid $17,500, and MFM Auto Sales d/b/a Central Auto Sales paid $15,000 to settle the charges. Ron
Price Motors paid $20,000 in civil penalties, Far West Auto Brokers $17,500, Bob Wright Motors $ 10,000,
Plaza Motors $10,000, and Koons Ford of Annapolis $40,000. In addition, a complaint charging violations
of the Rule was filed against Aurora Discount Cars.
Budget Marketing, a nationwide telemarketer of magazines, was
ANNUAL REPORT 1989
25
business titles, including Spanish translations, from which consumers and businesses can order new
materials.
ECONOMIC SUPPORT
During the fiscal year, the Bureau of Economics provided economic support to Consumer Protection
casework and rulemakings. In addition, the Bureau began several studies of consumer related issues and
completed work on several long term studies.
ECONOMIC ACTIVITIES
The Bureau of Economics provides economic support to the FTC's antitrust and consumer protection
activities, advises the Commission about the impact of government regulation on competition, and analyzes
economic phenomena in the American economy as they relate to antitrust, consumer protection, and
regulation.
The primary mission of the FTC is to enforce the antitrust and consumer protection laws. In 1989, the
Bureau of Economics continued to provide guidance and support to those activities. In the antitrust area,
economists offered advice on the economic merits of potential antitrust actions. Situations where the
marketplace performed reasonably well were distinguished from situations where the market might be
improved by Commission action. When enforcement actions were initiated, economists worked to integrate
economic analysis into the proceeding, to Provide expert testimony, and to devise remedies that would
improve market competition.
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 variety, and overall consumer welfare.
Although the FTC is primarily an enforcement agency, it is also charged with analyzing data and
publishing information about the nation's industries, markets, and business firms. Much of this work is
undertaken by the Bureau of Economics. In 1989, economists conducted a number of studies on a broad
array of topics in antitrust, consumer protection, and regulation.
ANTITRUST
In the antitrust area, economists participated in all investigations of alleged antitrust violations and in
the presentation of cases in support of complaints. Economists also advised the Commission on all proposed
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FEDERAL TRADE COMMISSION
antitrust actions. These activities consumed the bulk of the Bureau's resources assigned to directly support
the Commission's antitrust responsibilities.
Several studies undertaken by the Bureau also support the Commission's antitrust activities. For
example, during 1989, economists investigated and published reports on the economics of sham litigation
and mergers in the US petroleum industry.
CONSUMER PROTECTION
In the consumer protection area, economists evaluated proposals for full phase investigations, consent
negotiations, consent settlements, and complaints. In addition, economists routinely provided day-to-day
guidance on individual matters and made policy recommendations directly to the Commission.
In addition to the Bureau's direct support for individual consumer protection matters, staff economists
studied and produced reports on consumer protection topics of particular interest to the Commission as well
as the Congress. These included examinations of health claims policy generally and, more specifically, the
effect on consumers of health claims for high fiber cereals.
REGULATION
In the regulation area, staff economists actively participated in the Commission's Competition and
Consumer Protection Advocacy Program. As part of this effort, Bureau staff reviewed a variety of
regulations that raise antitrust or consumer protection issues. These reviews led to several invited staff
comments including submissions to the Postal Rate Commission, the National Association of Attorneys
General, the Federal Communications Commission, the Securities and Exchange Commission, the
International Trade Commission, and several state and local regulatory bodies or legislatures. In addition,
staff economists completed analyses of the effects of regulation in long-distance telephone markets, in local
building codes, and in international trade of autos, steel, and textiles.
EXECUTIVE DIRECTION,
ADMINISTRATION AND MANAGEMENT,
REGIONAL OFFICES
The Office of the Executive Director carries out administrative and management responsibilities for the
Commission as well as providing management direction to the agency's ten regional offices. The Executive
ANNUAL REPORT 1989
27
Director administers these functions through a series of divisions, including Personnel, Budget and Finance,
Procurement and General Services, Information Services, Automated Systems and the Library. in fiscal 1989
major management initiatives included:
OFFICE AUTOMATION
An organizational change was made to improve information systems support services and to increase
litigation support by merging ADP support staff from the Bureau of Economics with staff from the
Automated Systems Division, and establishing the Litigation Support and Economic Analysis Branch. Also
directly related to improved user support services was the consolidation and simplification of the Help Desk
and the Information Systems Request process.
Several Commission-wide systems were put into operation including the Office of the Secretary's
Records System, the Contract Management Read-Only System, and the Bureau of Competition Clearance
System. Other office systems completed during the year included the implementation of BEAM3 - a utility
that enables staff to print a document on any printer throughout the agency using the local area network,
installation of WordPerfect 5.0 on pc's throughout the Commission, distribution of new Wyse pc's, and,
enhancement of the agency's telecommunication system.
Internal controls were improved by the establishment of the Planning and Information Standards
Program. This program will promote the sharing of information and system across organizations and will
reduce the cost of generating and storing information. Also, Call Detail Reporting was implemented to
provide more management control over telephone costs, and the new Property Management System was
designed to provide information to managers about location and distribution of personal computers and other
hardware.
A decision was made to convert the Commission's Automated Information Systems to a "relational
database" design. The Information Services Division assumed the role of "Data Administrator" for all of the
Commission's automated information. The project to convert the existing systems to the new concept will
require more than two years, but will result in higher quality data and more effective retrieval of information
from the information systems.
The Library Services Branch responded to approximately 14,000 reference questions, conducted over
4,100 computer searches on commercial databases, processed 2,700 interlibrary loan transactions, circulated
26,000 items, and added over 2,100 items to its collection bringing the total collection to over 117,000
volumes.
The Information Center sponsored 83 classes on 33 different topics and had 821 people to attend classes
ranging from using LEXIS on the
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FEDERAL TRADE COMMISSION
pc to basic phone training. New classes were added to the training schedule to introduce staff to the changing
ADP environment at the FTC. The staff also performed over 5,500 records check searches in response to
999 questions for information. A records check system which will allow FTC staff to do their own records
check searching is in the final stages of development. In addition, the Information Center formed several pc
user groups, held an open house, and issued several publications.
BUDGET AND FINANCE
The fiscal 1989 appropriation for the Federal Trade Commission was frozen at the preceding year's level.
This forced the Commission to undertake a severe cost reduction program, including personnel reductions
through early retirement and reduction-in-force programs. The Commission spent $66.2 million and used
894 workyears in fiscal 1989. The workyears used were about 10 percent fewer than in fiscal 1988. Finally,
two audits of agency activities were completed prior to April, 1989, at which time responsibility for audit
activities was transferred to the newly established Office of the Inspector General.
HUMAN RESOURCES
The Commission experienced a reduction-in-force during fiscal 1989 and consequently little recruiting
was done and other human resource initiatives were drastically decreased. However, a comprehensive study
of alternative work schedules was conducted and it was determined that this program should be implemented
in the next fiscal year.
The agency's main recruitment tool, the merit promotion plan, was totally revised providing the agency
with more flexibility in recruiting and promoting employees. Various management guides and informational
brochures were developed and distributed to staff.
During Fiscal 1989, the Office of EEO continued to expand initiatives designed to attain total integration
of equal employment opportunity principles into the agency's management process. Specific initiatives
included evaluating and recommending improvements in our management systems that enhanced better
understanding of responsibilities and more active participation of senior managers m formulating and
monitoring equal employment opportunity strategies within their organizations, as well as their ability to
resolve problems. Work also continued on a variety of ongoing responsibilities including providing
guidance, processing complaints, and monitoring and tracking employment trends.
APPENDIX
PART II (INVESTIGATIVE STAGE)
CONSENT AGREEMENTS ACCEPTED
AND PUBLISHED FOR PUBLIC COMMENT
MAINTAINING COMPETITION MISSION
American Institute of Certified Public Accountants
The American Institute of Certified, Public Accountants agreed not to restrict certified public
accountants from accepting contingent fees or commissions for professional services to clients for whom
they are not providing financial statement reviews or other attest services. The complaint accompanying
the agreement charged that the association restricted CPAs from providing services to clients under
either a fixed fee or contingent fee arrangement. According to the complaint, the association barred
CPAs who prepared financial plans from accepting commissions on a client's purchase of any products
recommended by the CPA and barred CPAs from offering assistance to clients for a fee contingent on
the amount of the client's. recovery. In addition, the complaint further alleged that the association
restricted CPAs use of truthful advertising, the solicitation of clients and acceptance of payments for
client referrals, and the use of nondeceptive trade names. The complaint alleged that these actions
restrained competition among CPAs and deprived consumers of information about available services.
Arkla, Inc.
Arkla, Inc., entered into a proposed consent agreement concerning its 1986 acquisition of Transark
Transmission Co. The Commission charged that the acquisition could hurt competition in the pipeline
transportation of natural gas in Arkansas and Oklahoma. Under the consent agreement, Arkla agreed to
divest the Transark pipeline or a portion of its own pipeline that runs through the two states to an
acquiror approved by the Commission. For a period of ten years, Arkla must obtain prior Commission
approval before acquiring any gas pipeline in Arkansas and Oklahoma.
Chain Pharmacy Association of New, York State, Inc.
(See - Brooks Drug, Inc., page 35.)
31
32
FEDERAL TRADE COMMISSION
(See - Carl's Drug Co., Inc., page 35.)
(See - Genovese Drug Stores, Inc., page 35.)
Cleveland Automobile Dealer's Association
(See page 36.)
KKR Associates
(See page 37.)
Medical Staff of Dickinson County Memorial Hospital
(See page 37.)
MTH Holdings, Inc.
The Commission accepted for public comment a proposed consent agreement that would permit two
investment banking firms, MTH Holdings, Inc., and Solomon, Inc., to acquire GU Acquisition
Corporation, the owner and operator of the Grand Union Company, a national retail grocery store chain.
According to the complaint accompanying the agreement, the acquisition would substantially reduce
competition between the MTH owned P&C Food Markets and the Grand Union stores in various areas
of Vermont and upstate New York. Under the consent agreement, MTH agreed to divest certain grocery
stores in Vermont and New York to eliminate antitrust concerns created by the acquisition. MTH and
Solomon also agreed to hold separate the entire 135 store Northern Division of Grand Union and to
operate the Division as an independent business until all of the divestitures have been completed.
Finally, the consent agreement requires MTH to obtain prior Commission approval before acquiring any
grocery store in any of the Vermont or New York counties in which the divestitures were ordered.
Oklahoma State Board of Veterinary Medical Examiners
The Oklahoma State Board of Veterinary Medical Examiners agreed not to restrict member veterinarians'
business arrangements. The complaint issued with the agreement charged that the board adopted rules
of conduct that prohibited members from forming a partnership with non-veterinarians to practice
veterinary medicine and accepting employment by a non-veterinarian or company
ANNUAL REPORT 1989
33
engaged in the sale of veterinarians I services to the public. According to the complaint, these actions
hurt competition and deprived consumers of the benefits of lower prices for veterinarian services that
could result from more efficient business arrangements.
Panhandle Eastern Corp.
(See page 38.)
PepsiCo, Inc.
(See page 38.)
Societe Nationale Elf Aquitaine
Societe Nationale Elf Aquitaine (SNEA) was permitted to acquire the Pennwalt Corp. under terms of a
proposed consent agreement. Under the agreement, SNEA agreed to divest within twelve months
Pennwalt's Thorofare, New Jersey, chemical plant to a Commission approved acquirer. In addition,
SNEA entered into a hold separate agreement, requiring that Pennwalt's fluorochemicals division be
operated independent of any other companies owned by SNEA. The complaint accompanying the
agreement alleged that the acquisition would reduce competition in the production and sale of
polyvinylidene fluoride and vinylidene fluoride. The agreement also requires SNEA to obtain prior
Commission approval before acquiring any company that manufactures or sells either of the two
chemicals for a period of ten years. The Commission's staff had been authorized to block the acquisition
with a motion for a preliminary injunction if SNEA had refused to divest the assets that had raised
antitrust concerns.
Structural Engineers Association of Northern California, Inc.
Under the terms of a proposed consent agreement, the Structural Engineers Association of Northern
California, Inc., agreed not to interfere with its members' use of truthful advertising and competitive
pricing policies for structural engineering services. According to the complaint issued with the
agreement, the Association's code of ethics prohibited structural engineers from advertising their services
and charging competitive prices, and from providing a second opinion on the work of another structural
engineer. The complaint alleged that these methods restrained competition by depriving
34
FEDERAL TRADE COMMISSION
consumers the benefits of selecting structural engineering services through advertised prices and
competitive business policies.
Sun Co., Inc.
(See page 39.)
Texas Board of Chiropractic Examiners
The Texas Board of Chiropractic Examiners agreed to repeal its Rules of Practice that prohibited
chiropractors from using any form of public communication that advertised services or fees. Under
terms of a proposed consent agreement, the Board may not interfere with its members' use of truthful
advertising about fees, services, and products, and is prohibited from taking any disciplinary actions
against any chiropractor who solicits patients through advertising. According to the complaint
accompanying the agreement, the State of Texas prohibits the Board from adopting rules and regulations
restricting truthful advertising or solicitation of patients. The proposed order does not restrict the Board
from adopting or taking disciplinary action to prohibit false or deceptive advertising.
CONSUMER PROTECTION MISSION
Budget Rent-A-Car Corp.
The Commission charged Budget Rent-A-Car with failing to disclose to prospective renters that it did
not inspect automobiles subject to recall notices within a reasonable period of time and, if appropriate,
make the necessary repairs. Budget agreed to inspect and repair affected vehicles within 120 days after
receiving a recall notice, or alternatively, to disclose to prospective renters that the vehicles are subject
to safety recall notices and may contain defects, if it chooses not to inspect.
Heilig-Meyers Co.
Heilig is required to calculate and disclose accurately the APRs in connection with the extension to any
consumer or credit subject to the Truth-in-Lending Act. Heilig is also required to make adjustments to
the accounts of customers to whom it disclosed APRs that were understated by more than 1/4 of one
percentage point, except for accounts where the amount of the adjustment is less than one dollar.
ANNUAL REPORT 1989
35
Nutronics Corp.
The Commission charged Nutronics with making false and unsubstantiated claims in advertising its fuel
saving device known as the Alter-Brake System. The company has agreed not to misrepresent the device
in the future.
Robert Lewis Wilks (Barbers Funeral Home)
The Commission charged Wilks, former owner of Barbers Funeral Home, with failing to provide his
customers with goods and services that they selected and paid for. According to the complaint, Wilks
misrepresented to consumers that he provided the caskets, burial vaults, and other goods and services,
but in numerous instances, Wilks buried deceased persons without the caskets and/or burial vaults
selected and paid for, and desecrated the bodies and graves of the deceased by dumping trash into the
caskets or graves. Wilks agreed to stop doing business as a funeral service provider, or having any
business relationship with any entity selling or offering to sell funeral goods or services to the public.
PART II (INVESTIGATIVE STAGE)
CONSENT ORDERS ISSUED
MAINTAINING COMPETITION MISSION
Brooks Drug, Inc.; Carl's Drug Co., Inc.; Genovese Stores, Inc.
Three members of the Chain Pharmacy Association of New York State, Inc. have separately agreed not
to enter into any agreement with any pharmacy firms to boycott any prescription plan to increase the
reimbursement rate for prescriptions. According to the complaints issued with the consents, Brooks
Drug Inc., Carl's Drug Co., Inc., and Genovese Stores, Inc. conspired with others to refuse to participate
in a New York State prescription plan program that would reduce the level of reimbursement for
prescription drugs. The complaints charged that these actions hurt consumers in New York by reducing
price competition among pharmacies after the state was forced to increase its payments paid to
pharmacies under the program. The Commission issued a separate administrative complaint against the
chain association. (See - Chain Pharmacy Association of New York State, Inc., page 42.)
36
FEDERAL TRADE COMMISSION
Carl's Drug Co., Inc.
(See page 35.)
Certain Sioux Falls Obstetricians
Eleven obstetricians in the Sioux Falls, South Dakota area agreed not to engage in collective, coercive
activities that interfere with the residency program of the University of South Dakota School of
Medicine. The complaint accompanying the agreement charged that a conspiracy among the doctors
began when the medical school recruited the area's first perinatologist for its full-time faculty. It charged
that when the perinatologist began advertising for patients, and the medical school continued recruiting
additional practicing obstetricians, the obstetricians threatened a boycott of the OB/GYN residency
program. The complaint alleged that a twelfth obstetrician acted in combination with them. That doctor
refused to sign the consent agreement and a separate administrative complaint was issued against him.
The Commission accepted a proposed consent agreement with him during the year. (See - Lee M. Mabee,
M.D., page 47.)
Cleveland Automobile Dealer's Association
The Cleveland Automobile Dealer's Association agreed not to enforce a limitation on members'
showroom hours. The agreement settled charges in an accompanying complaint that the association
adopted a policy that restricted auto dealers from conducting business on Sundays and curtailed the hours
of operation during certain week nights. According to the complaint, the limitation on hours hurt
competition among car dealers in the Cleveland area and reduced consumers' opportunities for
comparative shopping.
Eugene M. Addison, M.D.
Fourteen physicians in the Huntsville, Texas, area agreed not to deal collectively with health
maintenance. organizations or health plans, boycott them, or deny hospital staff privileges because the
applicant for privileges is associated with them. The agreement settled charges in an accompanying
complaint that the physicians first acted collectively in negotiations with HMOs to obtain more
advantageous terms of participation, and then when those efforts were unsuccessful, collectively refused
to participate with HMOs. The complaint also charged that the physicians engaged in an effort
ANNUAL REPORT 1989
37
to restrict the hospital privileges of physicians affiliated with HMOs. The complaint alleged that these
actions limited competition and increased prices to consumers.
Genovese Stores Inc.
(See page 35.)
Iowa Chapter of the American Physical Therapy Association
The Iowa Chapter of the American Physical Therapy Association agreed not to restrict member therapists
from being employed by physicians. The complaint issued with the consent agreement charged that the
association adopted a resolution saying it was illegal and unethical for physical therapists to work for
doctors, called on its members to report any such therapists and threatened disciplinary action against
such therapists. According to the complaint, these actions hurt competition and deprived consumers of
the choice of providers and the convenience of choosing physicians and physical therapy services at the
same location.
KKR Associates
KKR Associates entered into a consent agreement under which it could acquire RJR Nabisco, Inc. The
agreement requires KKR to divest within twelve months to an approved Commission acquirer either its
Beatrice division of the RJR assets used in the production and sale of packaged nuts, ketchup and
oriental food. Under a hold separate agreement issued with the order, KKR is required to operate RJR
separately, and its ability to participate in the business decisions of RJR are limited until all of the
divestitures are completed. The complaint charged that the acquisition would reduce competition in the
production of branded ketchup, shelf-stable oriental entrees, shelf-stable oriental noodles, and , shelf-stable oriental vegetables, soy sauce and packaged nuts. Finally, the order requires KKR to obtain prior
Commission approval before acquiring any significant interest. in a company engaged in the production
or sale of products named in the complaint.
Medical Staff of Dickinson County Memorial Hospital
The Medical Staff of Dickinson County Memorial Hospital and twelve doctors who practiced in the
upper Peninsula of Michigan, in Dickinson County, agreed to settle charges that they conspired
38
FEDERAL TRADE COMMISSION
with others to prevent Marquette General Hospital from opening a proposed new medical clinic, which
would offer competing medical services in a neighboring county. According to the complaint issued with
the order, the medical staff and doctors, solicited other area doctors to join in their threatened refusal to
refer patients to the proposed clinic and to agree not to practice at the new facility. The complaint
alleged that these actions hindered competition among physicians and hospitals and deprived consumers
of their ability to choose among a variety of alternative types of health care facilities and services. The
order prohibits the medical staff and others involved in the conspiracy from withholding patient referrals
from any physician, hospital, clinic or other health care provider. The consent order covers the medical
staff, twelve doctors and two medical societies. A separate administrative complaint was issued against
one other Dickinson County doctor. (See - Robert G. Koski, D.O., page 44.)
Panhandle Eastern Corporation
The consent agreement required Panhandle to divest its fifty percent interest in Stingray Pipeline Co. The
complaint accompanying the consent alleged that the acquisition by Panhandle Eastern Corporation of
Texas Eastern Transmission Corp. would create a monopoly in the transportation of natural gas out of
Southern Texas and Western Louisiana. Under terms of the agreement, Panhandle must obtain prior
Commission approval before acquiring any natural gas pipeline in that area.
PepsiCo, Inc.
The Commission accepted a consent agreement resolving the acquisition by PepsiCo, Inc. of seventeen
bottling companies from General Cinema Corporation. The complaint accompanying the consent
agreement, alleged that the acquisition could lessen competition and increase the possibility of collusion
among bottlers of carbonated soft drinks in Staunton, Virginia, and in the Fort Lauderdale area of
Florida. According to the complaint, after the acquisition PepsiCo would become both a bottler of nonPepsiCo brands and a supplier of PepsiCo brand products distributed by PepsiCo-owned bottlers in the
two areas. Under terms of the agreement, the non-Pepsi soft drink assets would be retained by General
Cinema. PepsiCo also agreed to provide bottling services, at cost, for five years to General Cinema for
its non-Pepsi soft drinks in Staunton and Fort Lauderdale. In addition, prior Commis-
ANNUAL REPORT 1989
39
sion approval is required for additional transfers by General Cinema of soft drink assets in the two areas
and any acquisition by PepsiCo of a bottler where it supplies concentrates for Pepsi brand products.
Sioux Falls Obstetricians, Certain
(See page 36.)
Sun Company, Inc.
Sun Company, Inc., agreed to divest petroleum assets to settle charges that Sun's acquisition of Atlantic
Petroleum Corp. would lessen competition in the distribution and marketing of light petroleum products
from terminals in Williamsport, Pennsylvania, and Binghamton, New York. Sun agreed to divest
Atlantic's terminals in Broome County, New York, and Lycoming County, Pennsylvania, and fifteen
ARCO stations associated with the terminals. In addition, the consent agreement requires Sun to obtain
Commission approval for a period of ten years before acquiring any light products terminals or pipelines
in certain parts of New York and Pennsylvania.
West Point-Pepperell, Inc.
West Point-Pepperell, Inc., divested certain towel and sheet making facilities to settle charges that its
acquisition of J.P. Stevens & Co., Inc, would substantially reduce competition in the manufacture and
sale of sheets and towels in the United States. Under the agreement, the Commission also ordered
divestiture of a sheeting mill and a yarn plant and prohibits West Point from making certain acquisitions
in the towel and sheet industry for ten years without prior Commission approval.
CONSUMER PROTECTION MISSION
Alamo Rent-A-Car, Inc.
Alamo, the fifth largest car rental company, agreed to settle charges that it failed to disclose to consumers
the existence and amount of airport surcharges and fuel charges when consumers inquire about possible
rental of its vehicles. Alamo agreed to disclose charges that are mandatory or are not reasonably
avoidable to every consumer who inquires about its prices.
40
FEDERAL TRADE COMMISSION
An-Mar International Ltd., Inc.
An-Mar, maker of Solar Cold suntanning devices, was charged with falsely advertising that its products
provide health benefits and that use of its machines by consumers does not pose a risk of harmful side
effects, such as skin cancer. An-Mar is prohibited from misrepresenting that its devices provide health
benefits and do not pose a risk of any harmful side effects.
Associated Mills, Inc.
Associated Mills was charged with having no basis for claiming that its Pollenex Bottled Water Maker
Reverse Osmosis System could remove certain hazardous organic chemicals such as chloroform from
tap water for a year. Under a consent agreement, the company agreed to have substantiation for future
performance claims for water treatment products. It must also have a reasonable basis for claims about
the expected life over which any environmental treatment product can treat or remove any contaminant
or reduce any health-related risks.
Batesville Casket Co.
The consent order settles charges that the nation's largest casket maker made false advertising and
warranty claims about the length of time its caskets will keep out air, water, and other gravesite
substances. The order prohibits future misrepresentations and unsubstantiated claims concerning casket
durability.
Coleco Industries, Inc.
Coleco was charged with falsely claiming that additional modules for its children's computer toy, My
Talking Computer, were available for sale, when that was not the case. The complaint alleges that two
of the four advertised modules, dealing with money and spelling, were not available when the availability
claims were made. The company has agreed not to misrepresent the availability of its computer related
products.
Cooper Rand Corp.
Cooper Rand, a company that sells lighter-to-lighter automobile battery chargers falsely claimed that,
its Auto Starter could restart auto batteries instantly, or as quickly as jumper cables, according to
ANNUAL REPORT 1989
41
the Commission's complaint. Cooper Rand agreed not to make false claims about its products in the
future and to notify approximately 131,000 purchasers of the Auto Starter about the limitations of the
Auto Starter, including its inability to start a vehicle as quickly as jumper cables.
General-Rent-A-Car, Inc.
General-Rent-A-Car, the seventh largest rental car company, was charged with failing to disclose to
consumers the existence and amount of airport surcharges and mandatory fuel charges when, consumers
inquire about possible renting of their vehicles. The complaint also charged that the company's "800"
operators fan to inform consumers of the car models they are renting even though, under General's
vehicle classification system, consumers could receive a smaller car than expected. General agreed to
disclose orally to every consumer who inquires all mandatory charges, as well as the car models they
would receive under the car classification the consumer selects.
JS&A Group, Inc.
JS&A Group and its owner, Joseph Sugarman, agreed to settle charges that they falsely claimed that their
program-length video advertisement was an objective investigation of their BluBlocker sunglasses.
JS&A is prohibited from falsely claiming that any product for personal or household use has been
independently investigated or evaluated. In addition, for the next ten years, JS&A must disclose clearly
and prominently in any program-length advertisement that it is an advertisement or' commercial.
Montgomery Ward & Co.
Montgomery Ward was charged with making false and unsubstantiated claims in selling its service
contracts. Ward is prohibited from misrepresenting service contract coverage and the need for buying
a service contract, including the need for maintenance, adjustment and servicing of products. Ward is
also prohibited from making unsubstantiated claims about the durability or reliability of any product for
which it sells service contracts.
Nutritone, Inc. (Body by Design)
Nutritone, a Boston health club, was charged with falsely claiming
42
FEDERAL TRADE COMMISSION
that its electric muscle stimulation treatments produced the same effects as exercises. The club and
owners agreed not to misrepresent any diet, strength development or fitness program in the future.
SILO, Inc.
SILO agreed to pay a $45,000 civil penalty for violations of the Energy Policy and Conservation Act and
the Appliance Labeling Rule. The Commission charged the defendants with illegally removing
EnergyGuides, which disclose energy usage information, and allow consumers to comparison shop for
the most energy-efficient product, from appliances it sold.
Ujena, Inc.
Ujena agreed not to misrepresent any term or condition of a money-back guarantee. It also agreed to
honor all valid refund requests to consumers who paid by cash, check or money order within 10 days of
receipt of the refund request, or within the time period specified in the advertisement. It agreed to send
credit statements to credit card issuers within seven days, when a purchase is made by credit card.
PART III ADMINISTRATIVE COMPLAINTS
MAINTAINING COMPETITION MISSION
Chain Pharmacy Association of New York State, Inc.
The Commission charged in an administrative complaint that the Chain Pharmacy Association of New
York State, Inc. illegally conspired to boycott that State's employees prescription plan in an attempt to
increase its reimbursement-rate. According to the complaint, the association, eight pharmacy chain, and
one individual threatened to refuse to participate in New York State's proposed Employees Prescription
Plan that would reduce the State's costs by reducing the price the State paid for the program. The
complaint alleged that competition was lessened among pharmacies who participate in prescription
benefit plans in New York. The complaint further alleged that the State of New York lost several million
dollars after the boycott coerced the State into increasing the prices paid to pharmacies under the
employees plan. Separate consent agreements settled charges against three of the pharmacy chains.
ANNUAL REPORT 1989
43
(See - Brooks Drug, Inc., page 35; Carl's Drug Co., Inc., page 35; and Genovese Drug Stores, Inc., page
35.)
Harper & Row, Publishers, Inc.
The Hearst Corporation,
The Macmillan, Inc.
The Putman Berkley Group, Inc.
Random House, Inc.
Simon & Schuster, Inc.
The Commission issued separate administrative complaints alleging that six book publishers ate against
independent bookstores in pricing. According to the complaints, Harper & Row, Publishers, Inc., The
Hearst Corporation, Macmillan, Inc., The Putman Berkley Group, Inc., Random House, Inc., and Simon
& Schuster, Inc., charged bookstore chains lower prices than independent bookstores regardless of the
size of the order. In addition, the complaints allege that the publishers offer discounts and promotional
allowances to bookstore chains only. The complaints allege that the higher prices paid by the
independent book stores have limited their ability to compete with bookstore chains.
Hearst Corporation, The
(See page 43.)
Hoechst Celanese Corporation
The Commission's complaint charges that American Hoechst Corporation's acquisition of Celanese Corp.
would substantially reduce competition in the manufacture and sale of the thermoplastic polymer resin
known as acetal. According to the complaint, American Hoechst's parent, Hoechst AG, Celanese and
Ticona Polymerwerke GMBH, a joint venture of Hoechst and Celanese, were competitors in the
production and sale of acetal. The complaint charged that due to the acquisition Hoechst Celanese
became the 100 percent owner of Ticona and that the acquisition therefore eliminated competition among
the three firms and enhanced the likelihood of collusion among the remaining producers in the industry.
A 1987 consent agreement settled antitrust concerns in the polyester textile fiber market and allowed
American Hoechst and Celanese to merge.
Macmillan, Inc.
(See page 43.)
44
FEDERAL TRADE COMMISSION
Promodes, S.A.
The Commission issued an administrative complaint challenging the acquisition by Red Food Stores,
Inc., of all the supermarket assets of Kroger Co. in Chattanooga, Tennessee. The complaint charged that
the acquisition by Red Foods, a subsidiary of a French grocery company, Promodes, S.A., would
eliminate direct competition between the two firms and would increase the retail prices of food and
grocery items in supermarkets in Chattanooga. Red Foods consummated the acquisition after the
Eleventh Circuit upheld a District Court decision that denied the Commission's motion for a preliminary
injunction.
Putnam Berkley Group, Inc., The
(See page 43.)
Random House, Inc.
(See page 43.)
Robert G. Koski, D.O.
The Commission issued a complaint alleging that Robert G. Koski, a doctor of osteopathy, conspired
with the Dickinson County Memorial Hospital medical staff and others in Dickinson County, Michigan,
to prevent a competing medical facility from opening in the area. According to the complaint, Dr. Koski
and others threatened to refer patients to physicians practicing at Marquette General Hospital's medical
office in Dickinson County. The complaint further alleged that Dr. Koski solicited other physicians in
the area to join the conspiracy to deny patient referrals to the new medical facility. A consent agreement
settled charges against twelve Dickinson County doctors, two medical societies and the hospital medical
staff. (See - Medical Staff of Dickinson County Memorial Hospital, page 37.)
Simon & Schuster, Inc.
(See page 43.)
Textron Inc.
The Commission charged in an administrative complaint that the
ANNUAL REPORT 1989
45
acquisition by Textron, Inc., of Avdel PLC. could substantially increase concentration in the design,
manufacture and sale of non-aerospace structural blind rivets. According to the complaint, the
acquisition would eliminate Avdel as a substantial independent competitor and could increase the
likelihood that other firms in the industry would increase prices and restrict production. on the stipulation
of the parties, a U.S. district court issued a temporary restraining order preventing Textron from taking
control of either the assets or operations of Avdel.
CONSUMER PROTECTION MISSION
Campbell Soup Co.
The Commission issued a complaint charging Campbell Soup Co. with making deceptive and
unsubstantiated claims in its "Soup is Good Food" advertisements. The Commission charged that
ads linking the low fat, low cholesterol content of its soups with a reduced risk of some forms of
heart disease, fail to disclose that the soups are high in sodium and that diets high in sodium may
increase the risk of heart disease. The complaint charged that in light of the representations made
in the ads, the company's failure to make this disclosure is deceptive.
Hensley Group
The Commission charged the Hensley Group, a timeshare promoter, and H. Lloyd Hensley, its president,
with falsely telling consumers that they had won one or more specified prizes, and that the prizes would
be awarded without paying additional costs. The Hensley mailings represented that the gifts or prizes
would be awarded to consumers who appear at the site at which resort memberships or other recreational
or real property interests are being sold.
Outdoor World Corp.
The Commission charged Outdoor World, a membership camp_ ground promoter, with telling
consumers that they had won one or more specified prizes, when they had not. The complaint alleges
that Outdoor World created and disseminated mailings listing prizes or gifts to be awarded to consumers
who appear at the site at which resort memberships or other recreational or real property interests are
being sold. In addition, the complaint charges that the company falsely represented that prizes would
be awarded at no cost, but
46
FEDERAL TRADE COMMISSION
consumers were unable to receive some prizes without paying additional costs.
Revlon, Inc. and Charles Revson, Inc.
The Commission charged Revlon and a subsidiary with making unsubstantiated claims about the
effectiveness of its Ultima II ProCollagen Anti-cellulite body complex. According to the complaint,
Revlon does not have a reasonable basis for its claims that the product significantly reduces cellulite and
reduces the skin's bumpy texture, ripples, or slackness caused by cellulite, that its product helps to
disperse toxins and excess water from areas where cellulite appears and increases subskin tissue strength
and tone.
Schering Corp.
Schering, a subsidiary of Schering-Plough Corp., a major national pharmaceutical manufacturer, was
charged with making deceptive and unsubstantiated claims that its product, Fibre Trim, is an effective
weight loss product and a high fiber supplement. The complaint charges that Schering falsely claims that
Fibre Trim is a high fiber supplement and the recommended daily dosage of Fibre Trim provides a
significant portion of a person's daily requirements of dietary fiber. The complaint also alleges that the
company did not have a reasonable basis for claims that Fibre Trim is an effective weight loss or
maintenance product and provides the health benefits associated with a fiber rich diet.
TK-7 Corp.
The Commission issued a complaint alleging that TK-7 and its president, Moshe Tal, made false and
unsubstantiated advertising claims concerning the performance characteristics of gasoline additives.
According to the complaint, the company claimed that its products can improve engine performance by
extending engine life, and increasing power, octane, and mileage. The company has marketed TK-7 as
a lead substitute gasoline additive for vehicles or other equipment that performs best with leaded
gasoline. Because of health concerns, the amount of lead in gasoline has been greatly reduced in recent
years. TK-7 has marketed its products as a solution to problems caused by these reductions in lead.
ANNUAL REPORT 1989
47
PART III (ADJUDICATIVE STAGE)
CONSENT AGREEMENTS ACCEPTED
AND PUBLISHED FOR PUBLIC COMMENT
MAINTAINING COMPETITION MISSION
Lee M. Mabee, Jr., M.D.
Dr. Lee M. Mabee agreed not to conspire to boycott the obstetrical/gynecological residency program of
the University of South Dakota School of Medicine. The consent agreement settled a 1988
administrative complaint that alleged that Dr. Mabee and eleven other obstetricians in the Sioux Falls,
South Dakota, area conspired to interfere with the recruitment practices of the medical school's residency
program. The Commission accepted a consent agreement with the other doctors. (See - Certain Sioux
Falls Obstetricians, page 36.)
PPG Industries, Inc.
(See page 49.)
Dr Pepper/Seven-Up Company
Dr Pepper/Seven-Up Company agreed to settle charges that the acquisition of certain San Antonio Dr
Pepper Bottling Co. assets substantially lessened competition in the production, distribution, and sale
of soft drinks in the San Antonio, Texas area. According to a 1988 administrative complaint, Coca-Cola
Company of the Southwest acquired the Dr Pepper and Canada Dry franchises from San Antonio Dr
Pepper in 1984. The complaint alleges that the acquisition eliminated a major competitor and increased
the likelihood that Coca-Cola would unilaterally exercise market power that could lead to increased
prices and restricted production of carbonated soft The complaint against Coca-Cola of the Southwest
remains in adjudication.
CONSUMER PROTECTION MISSION
R.J. Reynolds Tobacco Company
The Commission alleged that R.J. Reynolds made false and misleading advertising claims regarding the
health effects of smoking. The Commission accepted for comment a proposed consent-under which the
company agreed not to misrepresent in
48
FEDERAL TRADE COMMISSION
future advertisements the purpose or results of a long-term scientific study funded by the National Heart,
Lung, and Blood Institute of the National Institutes of Health (MR PIT study). In addition, under the
proposed consent, Reynolds would be prohibited from misrepresenting in any manner, directly or by
implication, any discussion of cigarette smoking and chronic or acute health effects, the results, design,
purpose or content of any scientific test or study explicitly referred to concerning any claimed
association between cigarette smoking and chronic or acute health effects.
PART III (ADJUDICATIVE STAGE)
CONSENT ORDERS ISSUED
MAINTAINING COMPETITION MISSION
New York State Chiropractic Association
The New York State Chiropractic Association agreed not to conspire to deal with third-party payers on
collectively determined terms, act on behalf of its members in negotiating with third-party payers, or
coerce third-party payers. The consent agreement settled a 1987 administrative complaint, that charged
that the association's members had agreed to act as a united front to coerce an increase in payment levels
and coverage from a health insurance company. The complaint charged that after the health insurance
company refused to accede to the demands, the association solicited its members to resign from their
participation m the insurer's program, and many members did so. The actions allegedly restrained
competition among chiropractors and increased the prices paid for their services. The consent agreement
also provides that for eight years the association may not advise its members on the desirability of
participating in plans offered by third-party payers, including providing advice on the price to be paid
or other terms of participation.
Pacific Resources, Inc.
Pacific Resources, Inc. agreed to obtain Commission approval before acquiring certain gas or oil assets
in Hawaii. The agreement settled a 1987 administrative complaint that charged that the proposed $32
million acquisition, which was abandoned, of the Hawaiian petroleum products and gasoline assets of
Shell Oil Co. would, if consummated, reduce competition in the supply of gasoline and diesel fuel in
Hawaii and could increase prices for gas
ANNUAL REPORT 1989
49
or diesel fuel in the state. Under the agreement, Pacific must obtain Commission approval before
acquiring certain terminalling, refining or gasoline retail marketing assets in Hawaii. It must also obtain
approval before entering into any terminalling agreement, such as a long-term lease, for more than 50
percent of a terminal's capacity.
PPG Industries, Inc.
PPG Industries, Inc. agreed to obtain prior Commission approval before acquiring certain firms engaged
in the manufacture of aircraft transparencies. The consent settled a 1986 administrative complaint that
charged that PPG's proposed acquisition of Swedlow, Inc., could substantially reduce competition in the
manufacture and sale of aircraft transparencies - windows, windshields and canopies used in private,
commercial and military airplanes and helicopters. The complaint against Swedlow was dismissed. (See
- Swedlow, Inc., page 52.)
CONSUMER PROTECTION MISSION
General Nutrition, Inc.
General Nutrition, one of the nation's largest health food chains, agreed to settle charges that it made
false and unsubstantiated claims that its food supplement, Healthy Greens, was effective in reducing the
risk of cancer. The consent agreement also settles additional charges from a separate investigation that
the company falsely claimed six other food supplements would promote weight loss and muscle growth
or retard aging. GNC is required to, in lieu of consumer redress, pay a total of $600,000 for research In
nutrition, obesity, or physical fitness. The money is to be divided equally among the American Diabetes
Association, the American Cancer Society, and the American Heart Association. The company also
agreed not to misrepresent government reports or scientific tests.
INITIAL DECISIONS
MAINTAINING COMPETITION MISSION
Owens-Illinois, Inc.
An Administrative Law Judge ruled that Owens-Illinois, Inc., must divest, within twelve months, the
glass container business acquired through its 1988 acquisition of Brockway, Inc. The judge upheld a
50
FEDERAL TRADE COMMISSION
1988 administrative complaint alleging Owen's acquisition of Brockway would substantially reduce
competition in the manufacture and sale of glass containers in the United States. According to the
decision, the merger eliminated Owen's strongest competitor and made Owens the largest domestic glass
container manufacturer with a 38 percent market share. The order also requires Owens, for a period of
ten years, to obtain the prior approval of the Commission before acquiring any firm engaged in the
manufacture or sale of glass containers in the United States.
CONSUMER PROTECTION MISSION
Kraft, Inc.
An Administrative Law Judge ruled that Kraft falsely advertised that its Kraft Singles cheese slices
contain as much calcium as five ounces of milk and more calcium than do most imitation slices. The
judge also found that the milk equivalency and imitation cheese superiority claims. were unsubstantiated.
The ALJ ordered the company not to misrepresent the nutrient content of its individually wrapped slices
of cheese in the future.
FINAL COMMISSION ORDERS
MAINTAINING COMPETITION MISSION
Detroit Motor Vehicle Dealers
The Commission upheld a 1984 complaint that charged that car dealers in the Detroit area had conspired
to limit the hours of operation for the sale and lease of motor vehicles. According to the decision, the
agreement of the dealerships, individuals and dealer association to limit showroom hours restricted
competition by limiting comparison shopping. The ruling requires the dealerships to remain open a
minimum of 64 hours a week for one year and requires the Detroit Auto Dealers Association to advertise
that the expanded shopping hours are available under the Commission order.
MidCon Corp.
The Commission, upheld the 1988 decision of an Administrative Law Judge that dismissed charges
challenging the merger, of MidCon Corp. and United Energy Resources, Inc. The 19,85 administrative
complaint charged that the merger would substan-
ANNUAL REPORT 1989
51
tially lessen competition in the transportation of natural gas from offshore areas in the Gulf of Mexico.
The Commission ruled that the evidence did not prove a likelihood of anticompetitive effects in any of
the relevant geographic markets identified in the complaint. Pursuant to a 1986 consent agreement,
MidCon divested its interest in the Arcadian Gas Pipeline System to settle charges concerning the New
Orleans/Baton Rouge, Louisiana, area.
Motor Transport Association of Connecticut, Inc.
The Commission dismissed a 1984 complaint that charged that the Motor Transport Association of
Connecticut restricted competition among motor carriers by fixing collective rates for the intrastate
transportation of property in the State of Connecticut. The Commission found that the association's
collective ratemaking activities were protected from the FTC supervision by the Connecticut Department
of Public Utility Control. According to the Commission's opinion, the Department exercises its
delegated authority to regulate motor common carriers and reviews and evaluates proposed tariffs within
agency guidelines. The Commission's order upheld the 1987 decision of an Administrative Law Judge.
New England Motor Rate Bureau, Inc.
The Commission upheld an Administrative Law Judge's decision that the New England Motor Rate
Bureau, Inc. hindered competition by illegally setting prices to be charged by member motor carriers for
the intrastate transportation of goods in Massachusetts and New Hampshire. The Commission found that
the bureau's collective ratemaking was not exempt from the antitrust laws under the state action doctrine,
which requires that the state clearly articulate its intent to displace competition with regulation and
supervise the collective activities. According to the 1983 complaint, the bureau conspired with others
to fix prices by collectively formulating and filing rates for the transportation of commodities within the
states of Massachusetts, New Hampshire, Rhode Island, and Vermont. The Commission ordered the
bureau to cancel and withdraw all filed tariffs and to terminate all its existing agreements with carriers
concerning the filing of established rates in states that do not actively supervise collective ratemaking.
In addition, the bureau is prohibited from fixing prices and filing collective rates in Massachusetts and
New Hampshire. Charges against activities in Vermont were dismissed in 1986 after the State of
Vermont deregulated the intrastate transportation of freight and the bureau
52
FEDERAL TRADE COMMISSION
ceased to formulate and file rates in that state. As to activities in the State of Rhode Island, the
Commission found that the bureau's rulemaking activities were supervised by the Division of Public
Utilities and Carriers and were therefore immune from antitrust liability by virtue of the state action
doctrine.
Swedlow, Inc.
The Commission dismissed its complaint against Swedlow, Inc., which challenged the company's
proposed acquisition by PPG Industries, Inc. Swedlow's shareholders accepted an offer from Pilkington
Brothers PLC after the District of Columbia Circuit Court of Appeals directed the district court to enjoin
PPG's merger attempt. Swedlow was acquired by Pilkington in 1986. The Commission accepted a
consent agreement with PPG prohibiting without prior approval future acquisitions of firms that produce
aircraft transparencies. (See - PPG Industries, Inc., page 49.)
Ticor Title Insurance Co.
The Commission ruled that Ticor Title Insurance Co., Chicago Title Insurance Co., Safeco Title
Insurance Co., Lawyers Title Insurance Corp. and Stewart Title Guaranty Co. illegally conspired to fix
the prices charged for title search and examination services through rating bureaus in six states. The
Commission found that the practice of filing uniform charges through rating bureaus for examination and
search activities in the six states was not an insurance function and was not protected from the federal
antitrust laws under any state action doctrine. The companies were prohibited from setting or filing rates
for title search and examination services through rating bureaus in New Jersey, Pennsylvania,
Connecticut, Wisconsin, Arizona and Montana. The order does not prohibit the companies from
collectively setting prices for their search and examination services in any state where the collective
activity, is monitored and supervised.
CONSUMER PROTECTION MISSION
North American Philips Corp.
The Commission upheld an Administrative Law Judge's finding that Norelco falsely advertised that its
Clean Water Machine would make tap water clean or cleaner, when it knew that the machine added a
potentially hazardous chemical to the water. The Commission put into effect the ALJ's order requiring
the company not to
ANNUAL REPORT 1989
53
misrepresent the performance of the Clean Water Machine or any other electric powered consumer
appliance. Under the order the company is also prohibited from misrepresenting any test or study of its
products.
Removatron International Corp.
The Commission upheld an Administrative Law Judge's ruling that Removatron, the largest maker of
high-frequency, tweezer-type hair-removal devices, made false and deceptive claims that its devices
permanently remove hair, and that the company lacked a reasonable basis for making such permanency
claims. The order prohibits the company from making unsubstantiated claims about its product and
requires it to possess clinical testing as substantiation for future permanency claims. The order also
requires that ads that make hair removal claims include a disclosure that there is no reliable evidence that
the device provides anything more than temporary hair removal.
ORDER MODIFICATIONS
MAINTAINING COMPETITION MISSION
Adolph Coors Company
The Commission set aside the provisions of a 1975 order against Adolph Coors Company that imposed
territorial restraints and certain customer restrictions on distributors of its products. One ,provision was
modified to prohibit Coors from refusing delivery of products that would be sold at unauthorized prices.
Atlantic Richfield Co.
The Commission set aside a 1961 order that prohibited Arco, the successor to Atlantic Richfield Co.,
from entering into sales commission agreements with suppliers of tires, batteries and accessories. The
order settled charges that the sales agreement between Atlantic Richfield and The Goodyear Tire &
Rubber Co. was an unfair method of competition.
Lafarge Canada Inc.
The Commission granted in part a request to modify a 1982 order with Lafarge Canada, Inc., formerly
Canada Cement Lafarge Ltd.,
54
FEDERAL TRADE COMMISSION
by setting aside the provision requiring Lafarge to obtain Commission approval before acquiring any
cement manufacturing plants, grinding plants, or distribution terminals in Florida. The Commission
denied the requests by Lafarge's parent, Lafarge Corp., to set aside the requirement for acquisitions in
other states and to limit the prior approval requirement to specific acquisitions and to certain classes of
assets. The original order settled charges that Canada Cement Lafarge's proposed acquisition of General
Portland, Inc., would substantially lessen competition in the cement industry in the Southeastern United
States.
L'Air Liquide S.A. and Liquid Air Corp.
The Commission modified L'Air Liquide's 1987 consent order and the 1979 consent order of its
American subsidiary, Liquid Air Corp., that required both companies to obtain prior approval for acquisitions. The 1979 order settled charges that Liquid Air's acquisition of the industrial-gases division of
Chemetron Corp. would eliminate competition between the two competitors in the production and sale
of air separation gases in various markets. The 1987 order settled charges that L'Air Liquide's
acquisition of Big Three Industries, Inc. would reduce competition in the production and sale of liquid
argon in the United States and of liquid oxygen and nitrogen in certain parts of the country. The
Commission modified both orders to exempt from the prior approval provision of each order acquisitions
of companies already owned or controlled by L'Air Liquide.
Lenox, Inc.
The Commission set aside two provisions in a 1970 order that settled charges that Lenox, Inc., illegally
set resale prices for its products. One of the provisions had barred Lenox from terminating dealers after
complaints from other dealers, the other provision had required Lenox to reinstate dealers terminated for
discounting or for selling to other retailers. The Commission denied Lenox's request to vacate the order.
Liquid Air Corp.
(See - L'Air Liquide S.A., page 54.)
Sears, Roebuck and Co.
The Commission modified a consent order to allow Sears, Roebuck
ANNUAL REPORT 1989
55
and Co. to use radius clauses, which restrict tenants from operating a similar type of store or offering
similar types of products or services within a certain radius of a shopping center. The Commission also
modified the order to allow Sears to agree with a developer to restrict the use made of other stores in a
shopping center so long as Sears is not a major tenant. The 1977 order settled charges that Sears
restricted competition in shopping centers by entering into agreements to exclude certain tenants from
operating retail stores in shopping centers. The Commission denied Sears' request to set aside the order
entirely.
Sharp Electronics Corp.
The Commission set aside a 1974 order that prohibited Sharp from restricting the territories in which its
dealers were permitted to sell calculators or the customers to whom the. dealers could sell.
CONSUMER PROTECTION MISSION
Kroger Company
The Commission denied a request by the Kroger Company to set aside a 1977 order prohibiting it from
failing to have advertised items available at the advertised prices. Kroger had agreed that the
Commission's action in amending the Retail Food Store Advertising and Marketing Practices Trade
Regulation Rule constituted a change of law requiring that the Kroger order be set aside. The order's
core prohibitions and defenses track those of the Rule. In denying Kroger's petition, the Commission
stated that it may be in the public interest to modify the order to enable Kroger to benefit from the Rule's
amendments, but Kroger had not requested such relief.
Lindal Cedar Homes, Inc.
The Commission denied a petition filed by Lindal, a manufacturer of pre-cut housing, to set aside or
modify a 1976 order issued against it. The order, which also names Sir Walter Lindal individually,
prohibits misrepresenting the ease and economy of or time involved in erecting its houses, prohibits the
use of certain unfair terms in contracts for the purchase of its houses and requires that certain warranties
be given to the consumer, incorporates the then proposed Franchise Rule., and requires compliance with
the Truth-in-Lending Act. Although the Commission found that Lindal does primarily market pre-cut
housing that requires professional assistance, it still derives about fifteen percent of its revenues from
56
FEDERAL TRADE COMMISSION
consumers who build their homes without professional assistance, the market the order was directed at.
The Commission also found Lindal's other changed conditions of fact and law arguments to be
unpersuasive.
National Indemnity Company, Inc.
A petition to vacate or modify a 1978 consent order was denied. Respondent sells property and liability
insurance. The order was issued because the respondent failed to notify consumers that an investigative
consumer report might be requested. The request to vacate or modify was based on the fact that
respondent no longer requested investigative consumer reports, and had an exemplary record of
compliance for ten years. The Commission found that respondent failed to show that changed conditions
of fact or law or the public interest justified vacating or modifying the order.
Readers' Digest Association, Inc.
Readers' Digest asked the Commission to modify two consent orders that required disclosure of all terms
and conditions of promotional offers. The Commission denied both requests. However, an advisory
opinion was provided which clarified some ambiguities concerning the orders' interpretation.
Ronby Corporation (Fred Astaire Dance Studios)
Ronby Corporation, national licensor of Fred Astaire Dance Studios, and its two owners, Chester F. and
Charles L. Casanave, agreed to a proposed modification of the 1964 order against the predecessor
licensor of the Astaire studios. The order was modified, giving Fred Astaire Dance Studio students
significantly increased protection by providing them with absolute cancellation and refund rights, and
other safeguards on prepaid contracts for future services. The modification was part of an agreement
negotiated with Ronby to settle charges of order violations.
PRELIMINARY AND PERMANENT INJUNCTIONS
MAINTAINING COMPETITION MISSION
Autoclave Engineers, Inc.
The Commission authorized its staff to seek a preliminary injunc-
ANNUAL REPORT 1989
57
tion to block Autoclave Engineers Inc.'s proposed tender offer for Tylan Corp. on grounds that the
acquisition would substantially lessen competition in the manufacture and sale of mass flow controllers
used to control the flow of process gases used in the manufacture of semiconductors. Before the filing
of the injunction action, the transaction was abandoned.
The BOC Group, Inc.
The Commission authorized its staff to seek a preliminary injunction against the proposed acquisition
by The BOC Group, Inc. of the Vacuum Products Division of Varian Associates, Inc. The Commission
believed that the acquisition would substantially reduce competition in the production and sale of helium
mass spectrometer leak detectors, which are used to discover leaks in products systems. The parties
abandoned the transaction before the injunction action was filed.
General Electric Co.
The Commission authorized its staff to seek a preliminary injunction to block a proposed joint venture
between General Electric and Union Carbide Corp. The Commission believed that the proposed joint
venture would substantially reduce competition in the production and sale of silicone products. Before
court papers were filed, the joint venture was abandoned.
Promodes, SA.
(See page 44.)
Societe Nationale Elf Aquitaine
(See page 33.)
Textron Inc.
(See page 44.)
U.S. Can Co.
The Commission authorized its staff to seek a preliminary injunction against the proposed acquisition
by U.S. Can Co. of Armstrong Industries, Inc., on the grounds that the acquisition would substan-
58
FEDERAL TRADE COMMISSION
tially reduce competition in the production and sale of one-gallon metal paint cans. The transaction was
abandoned after the Commission authorized seeking an injunction.
CONSUMER PROTECTION MISSION
Action Credit Systems, Inc.
The federal district court approved four stipulated final orders and judgments against defendants
prohibiting them from selling credit repair and credit card procurement services and requiring them to
pay money for use as consumer redress or disgorgement to the U. S. Treasury.
American Credit Services, Inc.
The Commission filed a complaint in federal court charging American Credit with misrepresenting in
advertising, its credit establishment and credit improvement services. The Commission seeks to
permanently enjoin American Credit from such misrepresentations in the future and to obtain redress for
consumers who purchased its services.
American Safe Marketing, Inc.
The Commission filed a complaint in federal district court charging American Safe Marketing with
making false and misleading claims in the sale of distributorships to sell fire extinguishers. The court
issued a temporary restraining order and temporary injunction with asset freezes.
Aurora Discount Cars
The Commission filed a complaint, alleging violations of the Used Car Rule, against William L.
Morrison, who does business as Aurora Discount Can a used car dealership in Seattle, Washington. The
complaint charges Morrison with failing to properly display Buyers Guides on the side window of used
vehicles he offered for sale to consumers. The Commission asked the court to order the defendant to pay
civil penalties and prohibit future rule violations.
Axiom III Corp.
The Commission filed a complaint in federal district court charging defendants with marketing a bogus
investment scheme in, which
ANNUAL REPORT 1989
59
consumers are likely to lose their entire investment, because there is such a small amount of gold in.
Axiom's mines and the defendants are not successfully mining or processing the ore. The Commission
asked the court to issue preliminary and permanent injunctions and is also seeking redress for consumers
who invested in the project.
BankCard Travel Club
BankCard agreed to pay up to $2.5 million in consumer redress to settle allegations that it failed to honor
cancellation requests and improperly charged annual membership fees to consumers' credit cards. In
addition, the company is prohibited from making any misrepresentations about the costs, benefits and
refund policies relating to membership in any program they offer. They must also notify members about
their right to cancel membership prior to the end of any free membership period.
Bruce Abrash
Bruce Abrash, one of the defendants in the Commission's case against Numismatic Funding Corp.,
agreed to settle charges that he misrepresented the grade and investment value of silver coins he sold to
consumers through telephone and mail order sales. Under the settlement, Abrash agreed not to engage
in future misrepresentations, and consented to the entry of a $125,000 judgment against him and a cash
payment of approximately $20,000.
Budget Marketing, Inc.
The Commission filed a complaint for alleged violation of the Commission's final order against Cowles
Communications, Inc., predecessor to Budget Marketing. The complaint also charged the company with
violating the Electronic Fund Transfer Act (EFT Act), and its implementing regulations, Regulation E.
The Commission asked the court to order defendants to pay civil penalties and to prohibit them from
violating the FTC order and the FTC Act.
California Pacific Research, Inc.
The Commission filed a complaint in federal district court charging California Pacific Research with
falsely advertising New Generation baldness preventative and remedy. The complaint alleges that the
ads, including 30 minute TV commercials, falsely represent that the shampoos and cleanser conditioners
reduce excessive hair loss in
60
FEDERAL TRADE COMMISSION
virtually everyone who has male pattern baldness and will promote new hair growth in a substantial
number of individuals who have male pattern baldness. The Commission is seeking pre and permanent
injunctions and an order requiring the company to pay refunds to consumers.
Case Equipment Co.
The Commission filed a complaint in federal district court charging Case Equipment Co. with making
false and deceptive claims in the marketing of machines that allegedly copy color pictures onto textiles
and other surfaces. The court issued a temporary restraining order and froze the defendants' assets.
Cecil B. Jacobson, M.D.
The Commission filed a federal district court complaint against Cecil Jacobson and the Reproductive
Genetic Center Ltd. charging that the defendants misrepresented that women who underwent defendants'
medical treatment were virtually certain to have successful pregnancies and later had, as a result of those
treatments, become pregnant. Subsequently, Jacobson agreed to a permanent injunction forbidding
future misrepresentations relating to his infertility practice and to pay up to $250,000 in consumer
redress.
Certified Rare Coin Galleries, Inc.
A federal district court entered a temporary restraining order against CRCG, a nationwide seller of coins
for investment, prohibiting misrepresentation of the value and investment potential of its coins. The
complaint charges that CRCG claimed falsely that its coins are a safe long-term investment, that
consumers can reasonably expect their coins to increase substantially in value over the purchase price
in three to five years, and that the coins are sold at or close to the prices at which they can be liquidated
through a market sale. The Commission is seeking preliminary and permanent injunctions and an order
for consumer redress.
Continental Communications, Inc.
The Commission filed a federal district court complaint against Continental and others, charging that
they mislead consumers about cellular phone licenses. The court granted the Commission's
ANNUAL REPORT 1989
61
request for a temporary restraining order, asset freeze and the appointment of a temporary receiver.
Creative Advertising Specialty House, Inc.
This company has agreed to pay $5,000 in refunds to consumers. in addition, the company, which falsely
represented $70 rubber dinghies as "Power motorboats" worth more than $1000 to consumers, has agreed
to a permanent injunction prohibiting it from engaging in direct mail or telemarketing solicitations that
misrepresent the facts. The company also agreed not to debit consumers' credit card accounts unless
specifically authorized to do so by consumers.
Credit Clinic Corporation
Steven Leff, former president of Credit Clinic Corp., agreed to settle charges that he misled consumers
by falsely claiming that the company could improve consumers credit records and by failing to honor
the company's money-back guarantee. The court approved a consent decree Prohibiting Leff from
misrepresenting his ability to improve consumers' credit reports or profiles.
Credit Repair, Inc.
In a complaint filed in federal court, the Commission charged that the Credit Repair "clinic" misled
consumers by falsely and deceptively claiming that it could substantially improve their credit records
and by failing to honor, its 100 percent money-back guarantee. The Commission asked the court to order
Credit Repair and its two principals to pay consumer redress and to permanently prohibit them from
engaging in the challenged practices.
Credit-Rite, Inc.
This company and individual defendants agreed to cease misrepresenting their ability to improve
consumers' credit bureau reports and to honor any refund promises they make to consumers. The two
principals pled guilty to federal criminal charges in New Jersey and were sentenced to serve prison terms
and to pay fines and restitution to consumers who were injured by their practices.
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FEDERAL TRADE COMMISSION
David and Annette DeFusco
The Commission filed a complaint in federal district court charging that defendants' promotional
mailings claimed that named consumers had won specified prizes, when they had not. The court issued
a preliminary injunction against the DeFuscos prohibiting them from misrepresenting that consumers will
receive awards for no costs, or misrepresenting any material fact concerning any award, prize, or
premium.
Engage-A-Car
The Commission obtained a settlement as to defendants Stanley Kessler and David Kessler which
prohibits them from violating the Franchise Rule by making misrepresentations about franchise or
business opportunity offerings. The consent decrees include agreements with the Kesslers to pay $1.5
million to a consumer redress fund to reimburse Engage-A-Car franchisees.
Environmental Protection Systems, Inc.
The Commission filed a complaint in federal district court charging Environmental Protection Systems
with misrepresenting the capabilities of water purifiers it sells and the return or replacement policies for
the purifiers. The court issued a temporary restraining order and preliminary injunctions with asset
freezes.
Federal Sterling Galleries
The Commission's Motion for Summary Judgment against Robert Sweeney was granted and redress in
the amount of $4.6 million was ordered. The Commission also obtained default judgments against the
remaining defendants, each for $4.6 million.
Hensley Group
The Hensley Group, a timeshare promoter, agreed to a stipulated preliminary injunction prohibiting it
from misrepresenting that consumers have won specified prizes. The Commission filed a complaint in
federal court charging that defendants, promotional mailings claimed that named consumers had won
specified prizes, when they had not. The Commission also issued an administrative complaint against
Hensley.
ANNUAL REPORT 1989
63
High Tech Advertising, Inc.
The Commission filed a complaint against High Tech Advertising charging violations of the Mail Order
Rule. The complaint charged the defendants with failing to, ship merchandise on time, failing to notify
consumers when they were unable to ship the products in a timely manner, and failing to provide refunds
to consumers who did not receive their orders. The Commission asked the court to issue preliminary and
permanent injunctions against the defendants and to order them to pay civil penalties.
Investment Development, Inc.
The Commission filed a complaint in federal district court charging Investment Development, a marketer
of amusement game machine franchises, with violating the Franchise Rule and making unfair and
deceptive representations in the marketing of its franchises.
KIS Corp.
KIS agreed to pay $1.55 million in consumer redress to purchasers of its one-hour photo finishing
minilab franchises, with the possibility of additional payments if assets become available. KIS is
prohibited from violating the FTC Act or Franchise Rule or from misrepresenting any aspect of a
business venture or the equipment, goods or services offered for sale in connection with a business
venture.
Lynn Murphy & Co., Inc.
A federal court has issued a permanent injunction against an Arizona company involved in selling
consumers investments in rare gold coins and silver and platinum bullion. Defendants were charged with
falsely representing the value of gold coins, and misrepresenting that they would purchase- bullion to
serve as collateral for loans they helped investors obtain from banks. The Commission successfully
moved for summary judgment and obtained a permanent injunction prohibiting the defendants from
making any misrepresentations concerning investments they offer. The court also entered a judgment
of $6.3 million to redress consumers who bought investments from the defendants.
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FEDERAL TRADE COMMISSION
Magui Publishers, Inc.
The Commission filed a federal district court complaint against Magui Publishers charging it sold fake
art works purportedly by Salvador Dali and other artists to art dealers who then sold them to consumers.
The court granted the Commission's request for a temporary restraining order, an asset freeze and the
appointment of a temporary receiver to run the business, Staff subsequently obtained a preliminary
injunction prohibiting any continued misrepresentations.
Memphis Lamp, Inc.
The Commission filed a complaint in federal district court charging Memphis Lamp with unfair and
deceptive practices in connection with the labeling of their fluorescent and incandescent lamps. The
court issued a temporary restraining order against the defendants.
Mytel International
Mytel has agreed to pay $250,000 in lieu of consumer redress, to settle charges it deceptively marketed
supplies directly and through other sales companies. It also agreed to stop doing business with
telemarketers it knows to make misrepresentations in their sale of office supplies. The complaint
charged that sales companies working with Mytel made repeated misrepresentations in selling photocopy
supplies over the phone to small businesses and nonprofit organizations around the country. The
complaint also charged that Mytel authorized, condoned, or assisted in these practices.
Nancy Murphy
Nancy Murphy, an officer of Lynn Murphy & Co., agreed to a stipulated permanent injunction to settle
charges she engaged in unfair and deceptive acts in the sale of rare gold coins and silver and platinum
bullion for investments.
National Alliance of Brokers
The Commission filed a complaint in federal district court charging National Alliance of Brokers with
misrepresenting the value, liquidity, and investment potential of their coins, over-grading their coins,
failing to deliver coins, and failing to honor their buy-back
ANNUAL REPORT 1989
65
policy. The court granted a temporary restraining order prohibiting further misrepresentations,
appointing a receiver, and freezing defendants' assets.
National Business Consultants, Inc.
The Commission filed a complaint in federal district court charging National Business Consultants with
making false and misleading claims in the sale of business opportunities for business consulting services.
The court issued a temporary restraining order and froze the defendants assets.
North American Enterprises
The Commission filed a complaint in federal district court charging the company with misrepresenting
a $1,000 government bond prize offered as part of a promotion to sell vitamins and with failing to honor
money-back guarantees.
North American Office Systems
A civil contempt action was filed for nonpayment of a civil penalty judgment awarded in 1987. The
court found the judgment debtors in contempt and ordered them to be held in the custody of the U.S.
Marshall until the judgment is paid.
Numismatic Certification Institute
The Commission filed a federal district court complaint alleging that NCI misled consumers as to the
grade of coins it certified for sale by coin retailers. The complaint alleges that NCI's affiliate, Heritage
Capital Corp., provided substantial assistance to a coin retailer, Certified Rare Coin Galleries, Inc.
(CRCG), knowing that CRCG was misrepresenting the security and profit potential of its coins to
investors. The Commission's case against NCI settled for injunctive relief and $1.2 million.
Outdoor World Corp.
A federal court issued a preliminary injunction, pending resolution of an administrative complaint,
against Outdoor World Corp., a membership campground promoter. The preliminary injunction
prohibited the company from misrepresenting that consumers have won specified prizes. The
Commission alleged that Outdoor World
66
FEDERAL TRADE COMMISSION
mailings indicating that a named consumer had won one or more specified prizes were false and
misleading because the named consumer has not won the specified prizes.
Pannos Mining Company
The Commission filed a complaint in federal district court charging that Pannos Mining, which sold
contracts for delivery of gold and silver from an Arizona mine, was a bogus investment scheme in which
consumers are likely to lose their entire investment. The court issued a temporary restraining order
against defendants, froze their assets, and appointed a temporary receiver to secure a fund for any redress
award. Preliminary injunctions were also issued against defendants.
Pantron I Corp.
The Commission filed a complaint against Pantron in federal district court charging the company with
falsely claiming that Helsinki Formula products will cure or prevent baldness. The Commission is
seeking preliminary and permanent injunctions and an order requiring the company to pay refunds to
consumers.
Rainbow Enzymes, Inc.
The Commission obtained three redress judgments against defendants in the Rainbow Enzymes matter.
The complaint charged that the defendants misled people into paying $3,000 each to participate in
manufacturing a cleaning fluid for which there was no market, and also encouraging these people to
recruit others to take part. Separate permanent injunctions and redress orders were issued against two
Rainbow salesmen. James Standridge was ordered to pay $20,000 in redress and Roy Standridge was
ordered to pay $25,000. Standridge, Inc., a farm implement dealership owned by Roy Standridge, was
ordered to pay $50,000 in redress. In addition, in cooperation with the U.S. Attorney, criminal charges
were brought against Stan Massie, the principal in the Rainbow case. Prior to trial, Mr. Massie pled
guilty to the charges and received a four year sentence.
Rare Coins of Georgia
The Commission obtained a settlement with the defendants in which they agreed to, pay $150,000 to
settle charges that they had
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misrepresented the grade and investment quality of coins they wholesaled to telemarketers for resale to
the public as investments. The settlement also prohibits further misrepresentations about the value of
coins and other investments they sell.
Richard J. Wiley (Certified Security Systems)
Wiley has agreed to settle charges that he used deceptive practices to sell distributorships for energysaving devices and home burglar alarms. Wiley agreed not to misrepresent any business ventures he
offers for sale in the future. Wiley is currently in federal prison on a criminal conviction relating to the
sales of distributorships. For five years after he is released from prison, he must post a $500,000 bond
before going into the business of selling distributorships.
Security Rare Coin & Bullion Corp.
The Commission charged in federal court that Security Rare Coin, a leading nationwide seller of coins
for investment, misrepresented the value and investment potential of coins. The Commission asked the
court to grant a permanent injunction, asset freeze, and an order to pay consumer redress.
7-Day Appraisal Services, Inc.
The Commission filed a complaint in federal district court charging 7-Day Appraisal Services with
making false and misleading claims in the sale of real estate appraisal franchises. The court issued a
temporary restraining order and preliminary injunction with asset freezes.
Solar Michigan, Inc.
The Commission won a stipulated permanent injunction and order of redress against Solar Michigan,
which was charged in federal court with falsely claiming that its solar energy heating systems can
significantly reduce residential heating fuel consumption and will pay for themselves in a short time.
The Commission had also charged that the company had no reasonable basis for making the claims.
Thermex, Inc. of Jacksonville
The Commission filed a complaint against Thermex of Jacksonville,
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a Florida manufacturer of loose-fill cellulose insulation, for violating the R-Value Rule. The complaint
alleges the defendants violated the Rule by overstating. the R-value and coverage of their insulation, and
by failing to base R-value claims on required tests. The Commission asked the court to order payment
of a civil penalty and an order to obey the Rule in the future.
Traditional Industries, Inc.
The Commission obtained a settlement with Traditional Industries and its subsidiaries providing for a
trust fund of $250,000 for refunds for a specified class of consumers. In addition, certain other
consumers were offered cancellation of their remaining contractual balance. Total consumer redress,
including both refunds and cancellation of the remaining balance is expected to exceed $3.6 million. The
defendants also agreed to a permanent injunction prohibiting future misrepresentations and requiring
them to perform services as promised. The consent decree also enjoins defendants from future violations
of the Cooling-Off Rule and the Truth-in-Lending Act.
Uni-Vest Financial Services, Inc.
The Commission filed a complaint in federal district court charging Uni-Vest with misrepresenting to
consumers the risk of investing in precious metals they offered. The Commission also charged that the
company failed to follow clients' instructions to sell, or not to sell, their investments. The Commission
asked the court to issue a permanent injunction and to order the defendants to pay refunds to consumers.
U.S. Consumer Promotions, Inc.
The Commission filed a complaint in federal district court charging U.S. Consumer Promotions with
misrepresenting the capabilities of water purifiers it sells and the return or replacement policies for the
purifiers. The complaint also charged that the company represents that consumers who purchase water
purifiers will receive valuable awards without being required to make any additional purchase. However,
consumers received vouchers that require payment of substantial additional sums of money to obtain
awards. The court issued a temporary restraining order and preliminary injunctions with asset freezes.
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69
Vacation Travel Club of America, Inc.
The Commission filed suit in federal district court alleging that this company deceptively marketed their
travel-related services at no charge as a prize or award, failed to provide refunds to consumers, made
unauthorized credit card charges to consumers' accounts and violated the Truth-in-Lending Act. The
Commission requested a temporary restraining order, preliminary and permanent injunctions and
consumer redress.
Vaughn Management, Inc.
The Commission filed a complaint in federal district court charging Vaughn Management with falsely
telling consumer they would receive an award for no cost, when consumers actually had to pay a
processing fee to obtain their awards. The Commission also charged that defendants failed to tell
consumers who paid the processing fees that they were required to spend hundreds of dollars more to
use the airfare vouchers they received as awards. The court issued a temporary restraining order and
froze the defendants' assets.
Wayne Pedersen
The Commission obtained a criminal contempt conviction against Wayne Pedersen, one of the
defendants in the Schoolhouse Coins case, for violating a federal court order aimed at preserving assets
for consumer redress. Mr. Pedersen was sentenced to three months in federal prison.
CIVIL PENALTY ACTIONS
MAINTAINING COMPETITION MISSION
Cooper Industries, Inc.
Cooper Industries, Inc. agreed to pay $100,000 in civil penalties to settle charges that Cooper violated
a 1979 order by acquiring stock of McGraw-Edison Co. in 1984 without obtaining prior Commission
approval. Under the 1979 order Cooper was required for ten years to obtain prior approval before buying
stock in any company that manufactured certain reciprocating gas compressors. According to the
complaint accompanying the consent judgment, Cooper held the stock in violation of the order until
1985, when McGraw-Edison sold its gas compressor business.
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FEDERAL TRADE COMMISSION
MidCon Corp.
MidCon Corp. agreed, to pay $100,000 in civil penalties to settle charges that MidCon violated a 1986
order by failing to divest its interest in the Arcadian Gas Pipeline System by February 1987.
Tengelmann Warenhandelsgesellschaft (The Great Atlantic & Pacific Tea Company, Inc.)
The Great Atlantic & Pacific Tea Company, Inc., and its parent, Tengelmann Warenhandelsgeseflschaft,
agreed in a consent judgment to pay $3 million to settle charges that they violated the premerger
notification requirements of the Hart-Scott-Rodino Act. The complaint accompanying the judgment
charged that A&P purposely avoided the filing obligation and statutory waiting period requirements of
H-S-R by forming a general partnership with five members of the Waldbaum family for the sole purpose
of acquiring more than $15 million worth of voting securities of Waldbaum, Inc. According to the
complaint, the transaction was actually an acquisition by A&P and not the partnership. The judgment
is the largest civil penalty ever secured by the Commission for violation of the H-S-R Act. The
complaint was filed in U.S. District Court for the District of Columbia at the request of the Commission
by the Department of justice.
CONSUMER PROTECTION MISSION
Bob Wright Motor Co., Inc.
Bob Wright Motor Co., a Richmond, Virginia used car dealership, agreed to pay $10,000 in civil
penalties to settle charges it violated the Used Car and Warranty Disclosure Rules. The defendants were
charged with failing to display Buyers Guides in the side window of vehicles offered for sale to
consumers, failing to include a required disclosure in sales contracts, and failing to provide consumers
with all required warranty disclosures.
Debt Collectors, Inc.
This company agreed to a civil penalty consent decree in the amount of $155,000 to settle charges it
violated the Fair Debt Collection Practices Act. In addition, the company agreed to include disclosures
in certain collection communications to consumers informing them of their rights under the Act in the
future.
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Dudley Hughes Funeral Co.
Dudley M. Hughes, Jr., owner of Dudley Hughes Funeral Company, must pay $80,000 in civil penalties
for violating the Funeral Rule. Hughes is also permanently enjoined from violating the Rule through
failure to provide consumers with price information and required disclosures. This was the first
contested lawsuit under the 1984 Funeral Rule.
Eastside Motors
Eastside Motors agreed to pay $25,000 in civil penalties to settle alleged violations of the Used Car Rule.
The defendants were charged with failing to display, distribute or properly translate "Buyers Guide"
information for consumers.
Eddy's Funeral Home (GMJB)
GMJB, a real estate partnership that formerly owned Eddy's Funeral Home, agreed to pay a civil penalty
of $10,000 and $4,200 in consumer redress to settle charges it violated the Funeral Rule by failing to
provide customers with written price lists of funeral goods or services and by charging for goods and
services that were never provided.
Errington Memorial Chapel
Errington agreed to pay $10,000 in civil penalties to settle charges it violated the Funeral Rule by failing
to provide each prospective customer with a general price list it the beginning of discussions concerning
funeral arrangements, failing to provide price lists for caskets and outer burial containers, and failing to
provide an itemized statement of the funeral goods and services selected.
Far West Auto Brokers, Inc.
Far West Auto Brokers agreed to pay $17,500 in civil penalties to settle charges it violated the Used Car
Rule. The defendants were charged with failing to display properly completed Buyers Guides in vehicles
offered for sale to consumers, failing to provide a copy of the Buyers Guide to its customers, and failing
to provide consumers with all of the disclosures required by the Warranty Disclosure Rule.
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Goodman Buick-GMC Trucks, Inc.
Goodman Buick-GMC Trucks agreed to pay $17,500 in civil penalties to settle charges it violated the
Used Car Rule. The company was charged with failing to properly complete and display required Buyers
Guides on vehicles offered for sale to consumers. The consent decree prohibits future violations of the
Rule.
Green Tree Acceptance, Inc.
This company agreed to pay civil penalties of $115,000 for allegedly discriminating against the elderly
by requiring larger down payments of them and for failing to give some consumers a reason for denying
them credit in violation of the Equal Credit Opportunity Act. In addition, Green Tree, when it denied
credit on the basis of information obtained from credit bureaus, failed to tell consumers it did so, in
violation of the Fair Credit Reporting Act. The company agreed not to violate the FCRA or the age
discrimination and notification provisions of the ECOA in the future.
James H. Turner Funeral Home, Inc.
Turner agreed to pay $10,000 in civil penalties to settle charges it violated the Funeral Rule by failing
to disclose required information to consumers seeking funeral services.
John Wannamaker Philadelphia
This company agreed to a civil penalty consent decree in the amount of $90,000 for allegedly
discriminating against married women who applied for credit in violation of the Equal Credit
Opportunity Act. Wannamaker agreed that in the future, when married couples applied jointly for credit,
it would not choose to consider one spouse's credit history over that of the other based on sex or marital
status.
Koons Ford of Annapolis, Inc.
Koons Ford of Annapolis agreed to pay $40,000 in civil penalties to settle alleged violations of the Used
Car Rule, the Warranty Disclosure Rule and the Magnuson-Moss Warranty Act. The defendants were
charged with failing to display properly completed Buyers Guides on cars offered for sale and to give
them to
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73
purchasers, and failing to include required disclosures in its warranty documents.
Lucas Funeral Home
Funeral Corporation of Texas d/b/a, Lucas Funeral Home has agreed to pay $20,000 in civil penalties
to settle charges that it failed to provide consumers with required information concerning funeral goods
and services.
MFM Auto Sales, Inc,
MFM Auto Sales agreed to pay $15,000 in civil penalties to settle charges it violated the Used Car Rule.
The company was charged with failing to display properly completed Buyers Guides on used vehicles
it offered for sale to consumers.
Milcon Industries, Inc.
Milcon Industries, d/b/a Blue Ridge Insulation, agreed to install additional insulation in residential and
commercial buildings and to pay a civil penalty of $10,000 to settle charges it violated the R-Value Rule.
The complaint charged the defendants with misrepresenting the amount of insulation Installed. The
defendants will not have to pay any civil penalty if 50 percent of the affected purchasers participate in
the redress program.
Niday Funeral Home
Niday Funeral Home agreed to pay civil penalties of $25,000 to settle charges that it violated the Funeral
Rule. The complaint alleged that Niday violated the Funeral Rule by failing to provide price lists and
an itemized statement of goods and services selected at the time and in the manner require d by the Rule,
and failing to provide consumers with other disclosures required by the Rule.
Northeastern Software, Inc
Northeastern Software agreed to pay $10,000 in civil penalties to settle charges it violated the Mail Order
Rule. The defendants are prohibited from violating the Mail Order Rule m the future, and from making
misrepresentations about shipment periods for merchandise ordered by telephone.
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FEDERAL TRADE COMMISSION
Plaza Motors, Inc.
Plaza Motors was ordered to pay $10,000 in civil penalties for violations of the Used Car Rule and the
Warranty Disclosure Rule. The complaint charged the defendants with failing to post required Buyers
Guides on cars offered for, sale to consumers, failing to include required disclosures in the sales
contracts, and failing to disclose in warranty documents required statements concerning limitations on
the duration of implied warranties.
Ronby Corporation (Fred Astaire Dance Studios)
Ronby Corporation, national licensor of Fred Astaire Dance Studios, agreed to pay $105,000 in civil
penalties over a three year period to settle charges that it violated a 1964 FTC order.
Ron Price Motors, Inc.
Ron Price Motors agreed to pay $20,000 in civil penalties to settle charges it violated the Used Car and
the Warranty Disclosure Rules. The defendants were charged with failing to display Buyers Guides on
used cars offered for sale and to provide them to purchasers and failing to provide consumers with
warranty disclosures.
Shelly Cars, Inc.
Shelly Cars agreed to pay $30,000 in civil penalties to settle charges it violated the Used Car Rule. The
defendants were charged with failing to display Buyers Guides on all of the used vehicles it offered for
sale.
World Products
World Products agreed to pay $10,000 in civil penalties to settle charges it violated the Mail Order Rule.
The Commission charged Mail Order Products, Inc., which does business under the name World
Products, with failing to make prompt refunds, failing to send proper notices when shipments would be
delayed, and when they did notify buyers, failing to do so within the applicable time period.
ECONOMIC REPORTS COMPLETED
Economic reports usually entail a significant commitment of resources
ANNUAL REPORT 1989
75
and report original research concerning an issue of current or long term policy interest to the Federal Trade
Commission.
The Impact of State Price and Entry Regulations on Intra-State Long Distance Telephone Rates, Alan
D. Mathios and Robert P. Rogers, November 1988. The study finds that states using price cap regulation
have 7-10 percent lower long-distance rates than states using rate-of-return regulation. hi addition, state
regulatory entry barriers tend to increase the price of long-distance telephone service.
Local Building Codes and the Use of Cost-Saving Methods, Richard Duke, January 1989. The study
finds that locally-drafted building codes no longer significantly increase building costs since almost all
localities have adopted national model codes that provide for cost-saving techniques. However, the study
also finds that many builders do not use most cost-saving methods permitted by the codes, in part
because purchasers of new homes apparently believe that houses built with older techniques are of higher
quality.
A General Equilibrium Analysis of the Welfare and Employment Effects Of US Quotas in Textiles,
Autos, and Steel, David G. Tarr, February 1989. Using state-of-the-art modeling techniques, this report
examines the costs of trade restraints in three industries. Findings indicate that voluntary export
restraints in these industries cost the U.S. $21 billion in 1984 while "protecting" 174,000 jobs in the three
industries. Thus, the annual cost of each job, protected was approximately $120,000.
Economics of Sham Litigation: Theory, Cases, and Policy, Christopher C. Klein, April 1989. The report
examines court records on public and private Sherman Act "countersuits" entailing allegations of sham
litigation, between 1972 and 1985. Using an empirical approach, the report seeks to answer the question
of "whether case law involving Sherman Act countersuits alleging sham litigation has developed in a way
that appropriately discourages the use of adjudicative proceedings to produce. anticompetitive
outcomes."
Mergers in the U.S. Petroleum Industry, 1971-1984: An Updated Comparative Analysis, Jay S. Creswell,
Jr., Scott M. Harvey, and Louis Silvia, May 1989. The report reviews recent evidence on oil industry
mergers and concludes that conglomerate mergers have become less important and that mergers have had
little impact on industry concentration.
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Health Claims in Advertising and Labeling: A Study of the Cereal Market, Pauline M. Ippolito and Alan
D. Mathios, August 1989. The report presents an empirical examination of the effects of the health
claims in fiber cereals which began in 1984. Evidence indicates that health claims in advertising
significantly alter consumer behavior and reach groups not otherwise reached by government and general
health information.
ECONOMIC ISSUES SERIES
Economic Issues Papers are literature reviews or policy analyses (rather than original empirical or
theoretical work) in a subject area relevant to the Commission's mission.
How Should Health Claims for Foods Be Regulated? An Economic Perspective, John E. Calfee and
Janis K. Pappalardo, September 1989. This is a policy analysis examining the application of a
cost/benefit approach to health claims. The analysis focuses on the problem that regulators tend not to
ask one of the right questions; "How much will it harm consumers if we do not allow a claim that turns
out to be true?"
WORKING PAPERS
Economic Working Papers are preliminary, unpublished work products of the Bureau of Economics,
resulting from original research by Bureau staff, either in connection with ongoing agency activities or
independent analyses, often requiring very minor allocations of staff time.
Deregulation by Vertical Integration, (WP#166), John R. Morris, October 1988.
A Theory of Minimum Quality Standards: Quacks, Lemons & Licensing Revisited, (WP#167), Michael
R. Metzger, November 1988.
The Relationship Between Industrial Sales Prices and Concentration of Interstate Natural Gas Pipelines,
(WP#168), John R. Morris, November 1988.
Do Government-Imposed Ownership Restrictions Inhibit Efficiency? FCC's Duopoly Rule, (WP#169),
Keith Anderson & John Woodbury, December 1988.
ANNUAL REPORT 1989
77
The Impact of Tariffs and Quotas on Strategic R & D Behavior, (WP#170), James Reitzes, January 1989.
Predation, Entry and the Diversified Firm, (WP#171), David Levy, January 1989.
Terminal Railroad Revisited: Foreclosure of an Essential Facility or Simple Horizontal Monopoly,
(WP#172), David Reiffen and Andrew Kleit, April 1989.
Regulation, Market Structure, and Hospital Costs: A Comment on the Work of Mayo and McFarland,
(WP#173), Keith B. Anderson, May 1989.
A Recalculation of Cline's Estimates of the Gains to Trade Liberalization in the Textile and Apparel
Industries, (WP#174), Michael R. Metzger, May 1989.
MISCELLANEOUS ECONOMIC POLICY PAPERS
Miscellaneous Economic Policy Papers result from basic research and explore well-defined industrial
organization and management strategy questions of interest to the broad policy concerns of the Commission.
These papers may be prepared by FTC staff economists or by outside individuals who have been granted
access to economic data compiled by the FTC.
Looking for a Profitability-Concentration Relation: Applying a U.X Test to U.S. Data, David R. Ross,
November 1988.
Characteristics of Divested Lines of Business, Habir Singh and Kathleen Saul, December 1988.
Empirical Studies of Innovation and Market Structure, Wesley M. Cohen and Richard C. Levin, January
1989.
Innovation and Learning: The Two Faces of R&D - Implications for the Analysis of R&D Investment,
Wesley M. Cohen and Daniel A. Levinthal, January 1989.
Industry Determinants and Differences in U.S. Intrafirm Exports, Anita M. Benvignati, February 1989.
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FEDERAL TRADE COMMISSION
Business Relatedness and Business Performance, Richard Klavans, February 1989.
Industry Heterogeneity and Its Effect on the Observed Determinants of Profitability, David R. Ross and
Ralph M. Bradburd, February 1989.
Knowledge Base, Variety, and Technological Change, Wesley M. Cohen and Franco Malerba, May
1989.
How Much Does Industry Matter?, Richard P. Rumelt, July 1989,
Do Firms Differ Much? Some Additional Evidence, Ioannis N. Kessides, August 1989.
The Random Character of Innovative Effort, Wesley M. Cohen, September 1989.
CONSUMER AND COMPETITION ADVOCACY
OFFICE OF CONSUMER AND COMPETITION ADVOCACY
The Commission, in fulfilling its competition and consumer protection missions, seeks to prevent or
lessen consumer injury caused by private or government activities that interfere with the proper functioning
of the marketplace. In some instances, laws or regulations may injure consumers by restricting entry,
protecting market power, chilling innovation, limiting competitive responses of firms, and wasting resources.
These results may occur because the interests of consumers are not always well represented. A goal of the
advocacy program, therefore, is to reduce the possible harm to consumers by informing appropriate
governmental entities of the potential effects on consumers, both positive and negative, of proposed
legislation or rule-making. The Office of Consumer and Competition Advocacy is the central source of
planning, coordination, review, and information for the staff's work in this area. In fiscal year 1989, the
Commission staff submitted 79 comments to a variety of states and agencies in such areas as advertising,
antitrust, communications, health care, occupational. licensing, rent control and transportation.
NATIONAL ORGANIZATIONS
American Bar Association
The Commission staff commented on proposed revisions to the American Bar Association Model Rules
of Conduct. The changes
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79
proposed a relaxation of restrictions on promotional activity of attorneys, such as use of direct mail. The
comment applauded the proposal, stating that it would benefit consumers. The comment further says
the proposal may unduly restrict some forms of telephone solicitation to the detriment of consumers and
should define more dearly the term "recorded communication."
National Association of Attorneys General
The Association of state Attorneys General requested that the Commission comment on proposed
guidelines for the car rental industry. The comment noted that the Commission agreed with the
guidelines' general conclusions that deception and unfairness in the advertising and marketing of rental
cars should not be tolerated, but expressed concern that certain provisions of the guidelines could
discourage advertising which might provide useful information, as well as advertising that was unfair
and deceptive.
In an additional letter to the National Association of Attorneys General, the Commission said that several
of the provisions found in the guidelines could discourage or prevent non-deceptive, fair and competitive
conduct. This could injure consumers, the comment noted.
FEDERAL AGENCIES
Bureau of Alcohol, Tobacco and Firearms
In response to a Bureau of Alcohol, Tobacco and Firearms (BATF) Federal Register Notice, the
Commission commented on two alternative proposals to revise its regulation governing the advertising
and labeling of "light" or "lite" alcoholic beverages. The comment suggested that the BATF first
determine through consumer testing whether consumers are deceived by current labeling practices in the
industry. If consumers are deceived, BATF should also consider using market research to find the best
means of curing the deception, the staff comment noted.
Department of Agriculture
The Commission staff commented on the Department of Agriculture's Food Safety and Inspection
Service (FSIS) proposal to make an exception to its rules requiring the disclosure of mechanically
separated meat in ingredient lists. The comment did not take a position on the merits of the proposed
change, but did identify
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FEDERAL TRADE COMMISSION
specific market and consumer survey information that FSIS might want to examine to determine whether
the proposed change would be warranted.
Department of Transportation
The U.S. Congress asked the Department of Transportation to consult with the Federal Trade
Commission in its preparation of a study that analyzes the competitive aspects of gross receipts fees
imposed by airports on off-airport car rental companies. The Commission comment develops DOT's
analysis, highlighting the factors likely to affect the magnitude of the impact on the prices, profitability
and locational decisions of both off-airport and on airport car rental companies. In addition, the
comment discusses the possible effects on competition in the car rental industry.
Environmental Protection Agency
The Commission staff commented to the Environmental Protection Agency on its proposed regulations
to limit the production of certain chemicals that disrupt the ozone layer. The EPA proposal would create
a system of marketable permits to be allocated to producers and importers of certain chemicals. This
market-based incentive plan appears to represent the lowest cost, most efficient, and most procompetitive method of implementing chemical reduction under the terms of the Montreal Protocol, the
comment said.
Federal Communications Commission
The Commission staff commented to the Federal Communications Commission on its regulations
governing the use and licensing of FM commercial translators. The comments reevaluated previously
used data in this area. The Commission staff found that rather than overstating the positive impact of
increasing the number of stations the comment understated the impact. Most new FM translators, the
comment further noted, are directed at low population areas not at high population areas which already
have adequate radio service.
In response to a Federal Communications Commission Notice of Inquiry, the Commission commented
on several proposed regulatory policies for Advanced Television. The comment makes several points.
First, the FCC should consider - allowing the market to determine the total quantity of spectrum allocated
to ATV. Second, considerable information on the benefits and costs to society is
ANNUAL REPORT 1989
81
necessary and third, the proposed requirement that ATV be compatible with existing television receivers
could impose future costs on society that exceed any benefits.
International Trade Commission
The staff commented on an antidumping and countervailing duty petition against antifriction bearings
and similar parts, from nine countries. The comments stated that an economically sound approach to
defining such terms as "like product" and "domestic industry" would likely have a beneficial effect in
this and future trade cases.
The Commission staff also commented on the International Trade Commission investigation into the
effects of significant limits on imports of manufactures, agricultural and natural resource products and
services. The comment discussed several models and concluded that annual gains to the U.S. economy
and to consumers from removing all tariffs on manufactured imports are between $0.6 and $1.3 billion
per year. In addition, both wage and income of workers and rental income of capital owners are situated
to increase slightly if these tariffs are removed.
Office of Personnel Management
The Commission commented on the Office of Personnel Management's proposals to adjust severance
pay regulations. The proposal would pay benefits to Federal employees involuntarily separated through
reductions in force, who accept employment with the private contractor who provides the service
previously performed by the separated employee. The proposal, according to the comment, would likely
improve efficiency by smoothing transitions from Federal to private provision of commercial services
and help private suppliers compete to supply commercial services to the government.
Postal Rate Commission
In response to a Postal Rate Commission (PRC) rulemaking concerning the Postal Service's request for
greater flexibility in setting rates for Express Mail to meet private competition, the Commission
recommended granting the postal service greater flexibility in pricing Express Mail. The Commission
staff proposed that the Postal Service be free to set Express Mail rates at any point
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within the zone of discretion established by the PRC without additional extended hearings and review.
The comment also said the change could harm consumers if regulatory advantages enjoyed by the Postal
Service were not simultaneously reduced or removed. The current advantages might pose a risk of
increased costs from inefficient and anti-competitive pricing.
In response to another PRC Federal Register notice, the Commission staff said that the PRC proposals
to improve statistical information the PRC receives from the Postal Service could offer substantial
benefits in return for relatively modest costs. The PRC could use the information to make better
decisions concerning postal rates and services. The comment stated that under PRC regulations,
statistical studies would sometimes fail to have documentation of the sources of data, the assumptions
made, and the statistical techniques that had been used. An improvement in the reporting procedures
could offer better statistical information for improved decisions at very little cost, the staff comment
concluded.
The Commission staff, in an additional comment provided more detailed suggestions on two methods
of assessing statistical information that the PRC received from other parties. The FTC staff had raised
the option of incorporating these two methods in the PRC's proposed regulations when it commented on
the proposed regulations designed to improve the statistical information that the PRC receives. The
comment suggested tests to assess the sensitivity of postal demand forecasts to small changes in the data,
in the variables used to explain postal demand, and in the forms of the explanatory variables that are
used.
The Commission staff commented to the Postal Rate Commission that it believes a study of the costs and
benefits of exempting addressed third class mail from the U.S. Postal Service's delivery monopoly would
be useful. Substantial benefits to consumers through improved mail service, lower postal costs, and
perhaps lower prices on advertised goods generally, could result from implementation of the proposed
exemption, the comment said.
The Commission staff commented to the Postal Rate Commission concerning advances in the economic
theory of regulated monopolies since the reorganization of the Postal Service in 1971. The comment
discussed two theoretical developments that are particularly relevant to the policy of maintaining the
government monopoly on letter mail.
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83
Securities and Exchange Commission
The Securities and Exchange Commission proposed some changes to its rules covering mutual funds that
use fund assets to pay costs associated with the distribution of fund shares, known as 12b-1 plans. The
Commission staff commented on these amendments to rules concerning certain fees charged by mutual
funds. The staff comment stated that the proposed amendments that would define payments made under
a 12b-1 plan as an "asset based sales load" may improve investor welfare. However, the amendments
that require 12b-1 payments to be made on a current-year basis may not be in the best interest of mutual
fund investors, the comment noted.
U.S. Customs Service
The Commission staff suggested in a comment on a Customs Service proposal to require permanent
country-of-origin marking only on those jewelry items in the imported American-style. The Customs
Service proposed regulations concerning such labeling for Native American style jewelry to address the
problems of imported jewelry being passed off as Native American products. Regulatory efforts, the
comment said, should focus on the problem that has been identified, namely, Native American style
crafts and choose the proposal least costly to importers and U.S. consumers,
STATES
Alabama
Commission staff commented on a bill before the Alabama Senate that would prohibit the suppliers of
construction equipment from discontinuing supply relationships with an Alabama dealer unless the
dealer breached a "reasonable" material provision of the franchise agreement and fails to correct such
a breach after being afforded several months to do so. The staff comment said the bill would likely harm
Alabama consumers by increasing the costs of distributing construction equipment, deter equipment
suppliers from entering into relationships with Alabama dealers, and possibly cause prices to increase
above a level that would prevail in a competitive market.
California
In testimony before the California Public Utilities Commission, the FTC staff commented on the benefits
of deregulating the trucking
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FEDERAL TRADE COMMISSION
industry. Deregulation appears to have brought lower prices and higher quality service to shippers, the
staff commented. Also, there is little reason to believe that deregulation brings predatory pricing or loss
of service to small communities. Eliminating or decreasing economic regulation of intrastate trucking
can result in significant benefits to California, the testimony further stated.
The Commission staff commented on a California Senate bill that would require certain persons who file
premerger notifications with the federal authorities to also simultaneously file them with the California
Attorney General. The bill would also permit the state Attorney General to disclose the reports to many
law enforcement agencies. The bill, the comment said, could increase concerns that sensitive data may
be disclosed. This may harm merger enforcement by decreasing compliance with the merger filing
requirements and impose a burden on businesses and consumers, the comment said.
Colorado
Commission staff commented on a Colorado bill that would require companies to inform their clients
of their rights under the Fair Credit Reporting Act. The comment said the disclosure provisions use
technical language and are too lengthy. The adoption of a short simple disclosure conveying information
that consumers could easily comprehend might be preferable. The comment also supported the inclusion
of effective disclosure requirements in legislation regulating the credit repair industry.
Commission staff commented on a Colorado bill to permit unrestricted branch banking in the state. The
Commission staff commented that the bill would likely permit some benefits from consumers and would
not prevent smaller banks from competing effectively and would not increase the risk of bank failure.
The comment noted that a number of studies suggest that the performance of banks is better in states that
permit branching than in states that do not.
Florida
The Commission staff commented on proposed amendments to the Florida Rules of Professional
Conduct for attorneys. The comment said the amendments may restrict the flow of truthful and useful
information to consumers and have the potential to interfere with
ANNUAL REPORT 1989
85
competition and increase costs without providing countervailing benefits to consumers. The comment
suggested that the Florida Bar Association consider modifying the rules to allow a wider range of truthful
communications and to ban only those that are likely to be unfair and deceptive.
The Commission staff commented on several provisions of a bill that would require that virtually all fees
be reflected in the total advertised price of car rentals rather than being stated separately. Because
studies have shown that price advertising enhances competition and lowers prices, the comment
suggested that the legislature be cautious in imposing any requirements that may discourage price
advertising. The comment said a provision that would mandate that car rental companies assume
responsibilities for losses over $200 would restrict consumer choice in whether or not to accept collision
damage waiver provisions. According to the comment, providing consumers with information on the
collision damage waiver provision may be more effective than requiring that collision damage waiver
be sold to all whether all consumers want it.
Georgia
The Commission staff commented on five bills before the Georgia legislature dealing with health care
certificate of need regulation and concluded that they might benefit Georgia consumers. The bills
propose to relax Georgia's requirements that health care facilities prove that new facilities and equipment
are needed before they can be constructed or purchased. The comment said a relaxation of the
requirements may lead to greater diversity and better quality in health care services and increased price
competition.
Illinois
The Commission staff commented on a proposal to restrict auto manufacturers in Illinois from licensing
repair shops or opening franchises. The proposal would most likely harm consumers by reducing
competition and increasing costs. The bill would prevent automobile manufacturers from licensing
repair shops to operate in areas where their new car dealers provide repair services and would reduce the
ability of manufacturers to franchise more than one dealer in any market. This could result in higher
prices for some types of repair services and for new cars.
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FEDERAL TRADE COMMISSION
The Commission staff commented on a bill that proposed to reduce the ability of acquirers of
corporations to engage in business combinations for three years after acquiring 15% of the target firm's
shares. The comment noted that vigorous takeover activity enhances economic efficiency 'and therefore
benefits consumers, workers and shareholders. The bills enactment, the comment stated, is likely to
deter takeovers that may actually increase economic welfare.
The Commission staff commented on an Illinois bill that would prohibit credit unions and buying clubs
that assist consumers in purchasing new and used autos at discount prices from licensed dealers from
doing so. The bill would prohibit this "brokering" activity and require a dealers' license in order to
perform many of the activities that can now be performed without a license. The proposal could limit
competition among automobile dealers and increase prices that consumers pay for automobiles.
The Commission staff commented on an Illinois bill that would limit the methods car rental companies
can use to calculate base rental charges and in advertising those charges, alter the allocation of costs and
risks of damage or theft, and ban long-term leasing on Sundays. The provisions could increase costs,
make it more difficult to obtain information about price and comparison shop, the comment noted. This
could lead to increased prices.
Louisiana
The Commission staff commented on a bill that would prohibit below cost gasoline pricing and prohibit
price discrimination in gasoline sales. The proposal would deny businesses the flexibility to adjust their
prices in response to supply and demand. It would likely add costs to the distribution of gasoline in the
state of Louisiana that do not exist in other states and the costs would be borne by Louisiana consumers
and visitors.
Massachusetts
The Commission staff commented on a Massachusetts bill that would amend state law to regulate certain
business combinations involving Massachusetts corporations and would authorize the use of "poison
pills", restrictions on the use of acquired stock. The comments suggested that the provisions be
applicable only to corporations that affirmatively elect to be covered by them so that
ANNUAL REPORT 1989
87
shareholders of a corporation determine whether restraints on the transfer of corporate control are in the
interests of the corporation. In addition, to prevent managers from protecting their own interests with
poison pills, the comment suggests that such requirements be approved by a vote of the majority of the
outstanding shares.
The Commission staff also commented on a Massachusetts bill that would require many prepaid health
care programs that offer pharmaceutical benefits to let any pharmacy participate may increase costs to
consumers, reduce competition and restrict consumers freedom to choose health benefits programs that
they believe best meet their needs.
The FTC staff commented to the Massachusetts Department of Public Utilities that issuance of additional
taxicab medallions for the city of Boston would benefit consumers. As a result of the restrictions, the
comment pointed out, consumers pay $14.5 million per year in excess of the costs of the service they
receive. Consumers would gain significantly from an increase in the number of cabs that would be
permitted to operate in the city, the comment stated.
The Commission staff commented to the Massachusetts Attorney General's office concerning proposed
revisions to the state's retail advertising regulations. The overall effect of several of the regulations may
be to unnecessarily restrict some forms of truthful advertising, particularly price advertising. They might
have the practical effect of chilling the dissemination of truthful advertising and this could harm
consumers.
Michigan
In response to a notice by the Michigan Department of Licensing and Registration, the Commission staff
commented on a proposal to change the administrative rules of the Michigan Board of Optometry. The
rule change would prohibit optometrists from delegating specified procedures to non-licensed qualified
eye-care professionals unless a licensed professional supervised the performance of the procedure. This
would prohibit opticians from performing various procedures that they routinely would do on their own,
unless supervised. These restrictions would harm consumers by limiting competition and increasing
costs and in the case of cosmetic contact lenses, not improve the quality of care.
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FEDERAL TRADE COMMISSION
Missouri
The FTC staff commented on a bill before the Missouri legislature that would prohibit physical therapists
from accepting wages or any other form of payment from a physician or other health care provider who
refers patients to the therapist, The comment said the bill would likely injure consumers by reducing
competition among physical therapy providers and decrease the choices available to consumers.
Montana
The FTC staff commented on a bill before the Montana legislature that would regulate gasoline prices
in the state. The bill would prescribe minimum price levels and prohibit price discrimination. If enacted,
the comment said, the proposal would likely injure consumers. Retailers might be unable to operate
discount outlets, short term price discounts would be deterred and higher retail gasoline prices in
Montana would possibly occur.
Nebraska
The Commission staff commented on bills before the Nebraska legislature to repeal or liberalize the
state's health care certificate of need regulation. The bills propose to repeal or liberalize Nebraska's
requirements that health care facilities prove that new facilities and equipment are needed before they
can be constructed or purchased. The comment said a relaxation of the requirements may lead to greater
diversity and better quality in health care services and increased price competition.
Nevada
The Commission staff commented on a bill that would prohibit physical therapists from paying or
receiving any referral fees. The comment said restrictions may harm consumers because restrictions on
referral fees may interfere with legitimate health care delivery systems that contain costs to consumers.
The restrictions might unnecessarily inhibit beneficial competition and limit choices for consumers, the
comment stated.
New Jersey
The Commission staff commented on several provisions of a bill
ANNUAL REPORT 1989
89
that would require, in effect, that collision damage waiver be purchased as part of all rental transactions,
ending the choice of consumers whether or not to purchase such coverage. The comment said this will
restrict consumer choice and will force consumers to pay higher costs, primarily in the form of higher
base prices. In situations in which consumers suffer from insufficient information, remedies that require
the disclosure of better information may resolve the problem rather than such a requirement.
In testimony before the New Jersey Division of Consumer Affairs, the Commission staff commented on
proposed rules implementing the Public Warehousemen Licensing Act. The proposed rules reflect
interpretations of the Act by state regulators that may unnecessarily inhibit mover pricing flexibility. ff
somewhat revised, the rules might better accomplish this laudable goal and better realize the procompetitive objectives of the Act.
The Commission staff commented on a proposed rule that would make it unlawful for anyone to
advertise or sell any merchandise as "new" when in fact it was not "new" as defined in the rule. The
comment expressed the view that even though there was support for the effort to ensure that misuse of
the term "new" did not result in consumer injury, the proposed rule would prohibit all merchandise that
has been returned from being sold as "new" making the definition overly broad and in some instances,
prohibiting nondeceptive competitive activity and thereby possibly injuring consumers.
New York
The Commission staff commented on several provisions of a New York state bill covering rental car
transactions. The comment said the portion of the bill that included new restrictions on the ability of car
rental companies to advertise and charge for certain specified items may increase the cost of price
advertising and harm the ability of car rental companies to advertise nationally. This could result in
reduced price promotion and lead to. higher prices. Also the bill would require that collision damage
waiver be purchased as part of all rental transactions, ending the choice of consumers whether or not to
purchase such coverage. This would restrict consumer choice and force consumers to pay higher costs,
primarily in the form of higher base prices, according to the comment. In situations in which consumers
suffer from insufficient information, remedies that require the disclosure of better information may
resolve the
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FEDERAL TRADE COMMISSION
problem rather than such a requirement. Finally, the staff commented on a provision that prohibits rental
car companies from requiring any security for a rental. This might increase the number of instances in
which car companies are unable to obtain payment for car rentals or for acts that the renter is liable.
Honest and careful drivers would then have to bear the debts of less careful people.
The Commission staff said a New York law that regulates the state's dairy industry should be allowed
to expire. The regulation of the dairy industry does not appear to be needed and consumers would
benefit if a competitive market were permitted, the comment argued. In a free market, competition will
encourage the milk industry to satisfy consumer preferences in the most efficient manner and maximize
consumer choice while ensuring that consumers pay the lowest competitive price, the comment said.
The Commission staff commented on a bill that would prohibit New York doctors and dentists from
dispensing more than a 72-hour supply of any prescription drug unless the physician or dentist dispenses
the drugs for free or is located more than ten miles from a registered pharmacy. The comments said such
restrictions could be harmful to consumers. With the increasing numbers of local group medical
practices and walk-in clinics providing convenience, there is increased competition for the sale of
prescription drugs. This leads to greater choice for consumers and lower prices.
The Commission staff commented on a New York City bill that would grant certain retail tenants seeking
lease renewal a "right of first refusal" to accept the rent obligation and length of lease negotiated with
any prospective new tenant. The bill might impair the efficient allocation of resources to and within the
commercial rental market and thus could injure landlords and tenants as well as the public at large, the
comment said.
North Carolina
In testimony before the North Carolina State Goals and Policy Board, Commission staff said economic
evidence does not support the view that certificate of need health care regulation reduces the costs of
health care. Certificate of need regulation generally requires a health care establishment to demonstrate
that new facilities or equipment are needed before they can be constructed or purchased. In addition to
testifying regarding the rationales for certificate of
ANNUAL REPORT 1989
91
need regulation, the staff also the increasing ability of the health care markets to function in an
unregulated, competitive way.
The Commission staff commented on a North Carolina bill that would prohibit distributors of household
furniture from using a variety of distributional restraints and require furniture distributors who sell to
North Carolina dealers to establish uniform wholesale prices and retailing standards. Legislation that
restricts the ability of manufacturers to control the distribution of their products is likely to harm
consumers since consumers can benefit from suppliers' placement of restrictions on retailing prices.
Ohio
Commission staff, in testimony before an Ohio State Senate Committee, stated that certificate of need
health care regulation has been unsuccessful in containing health care costs. The state Senate is
reviewing the state's certificate of need regulation which requires a health care establishment to
demonstrate that new facilities or equipment are needed before they can be constructed or purchased.
One reason health care economists hold this view is that certificate of need regulation restricts the
availability of new firms to enter a health care market and compete against an incumbent provider. This
may in turn increase prices and interfere with improvements in the quality of care.
Oklahoma
The Commission staff commented on a proposal to revise the Oklahoma state Constitution and eliminate
constitutionally mandated interest rate ceilings in the state. The comment said removal would promote
the availability of consumer credit and would be beneficial for consumers. An interest rate ceiling may
substantially harm consumers since when an imposed ceiling is lower than the competitive market rate,
lenders must make adjustments by either increasing other charges, reducing the volume of credit or doing
both.
Oregon
The Commission staff commented on a bill in the Oregon State Senate that would prohibit accountants'
use of referral fees and commissions. Such a proposal would reduce competition among accountants and
restrict the dissemination to consumers of informa-
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FEDERAL TRADE COMMISSION
tion about accounting services thereby adversely affecting consumers' ability to obtain accounting
services on the terms they want. The prohibitions, the comments said, would restrict competition more
than is reasonably necessary to protect consumers against conflicts of interest.
Commission staff commented about a bill in the Oregon State Senate that would prohibit suppliers of
"heavy equipment" from discontinuing supply relationships with any Oregon dealer unless the supplier
is withdrawing from the state, or the dealer breaches a 11 reasonable and material" provision of its
contract with the supplier. By denying businesses the flexibility to tailor their supply contracts to the
market, the bill would tend to create an excessively rigid distribution system unresponsive to market
conditions. This could lead to increased prices for consumers, the comment noted.
Pennsylvania
The Commission staff commented on Pennsylvania"s restrictions on advertising by dentists during a
review of the state's Board of Dentistry regulations being conducted by the state's Independent
Regulatory Review Commission. The comment said the regulations should only prohibit false,
misleading or deceptive advertising. The elimination of the Board's restrictions governing advertising,
by dentists in the state could enhance the dissemination of truthful information to the public. Consumers
would benefit through improved information and lower dental prices created through increased
competition.
The Commission staff testified before the Business and Commerce Committee of the Pennsylvania
House of Representatives on a bill that would require all sellers of pre-need cemetery goods or services
to deposit into a trust fund 100% of the proceeds of any such sale. The proposal may restrict the sale
of pre-need goods and services without providing sufficient countervailing consumer benefits, The
ability of consumers to choose pre-need funeral services would be substantially restricted.
South Carolina
The Commission staff commented on a South Carolina bill proposing to require that wholesale gasoline
prices be rolled back to their levels as of April 1989. Such restrictions, the Commission staff
commented, could cause a return to gasoline shortages, and retail
ANNUAL REPORT 1989
93
gas prices could therefore rise to an inflated level in the state of South Carolina.
The Commission staff commented to the South Carolina Legislative Audit Council on the restrictive or
anticompetitive effects of the state's statutes or regulations governing the activity of six state agencies
that deal with occupational licensing programs. Certain provisions in the regulation could have
anticompetitive effects and the Council may wish to consider alternatives to these provisions, the
comment stated.
The Commission staff commented on a Board of Architectural Examiners regulation prohibiting
competitive bidding. The comment suggested there are other public and private means for protecting
health and safety that are less restrictive of competition, adding that restrictions on competitive bidding
may not be necessary to protect the public's health and safety. The Council, the staff recommended,
should consider the costs imposed by this regulation in light of its limited benefits.
Texas
Commission staff commented on a bill in Texas that would provide for voluntary state licensure of
electricians and electrical contractors. The comment said the proposal would probably eliminate some
of the existing barriers to practice and in this way benefit consumers by reducing prices and increasing
consumer choices. The proposal would establish a state licensing board and provide for the voluntary
testing of electricians. The decrease in barriers to entry may increase competition and lower prices, the
comment said.
The Commission staff commented on a proposal in the Texas State House that would partially
deregulate the tow truck industry in the state of Texas. The comments said a significant body of
evidence suggests that deregulation of trucking services lowers rates and improves services. The
proposal is important, the comments stated, because it could move Texas toward a more competitive tow
truck industry. This would result in significant benefits for consumers and competition.
Commission staff commented on a Texas bill that would ban certain forms of below cost pricing. The
bill would ban below cost sales made by a retailer or wholesaler with the intent of injuring
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FEDERAL TRADE COMMISSION
competition. This proposal, the comment stated, could chill price competition that would benefit
consumers.
Commission staff commented on a Texas bill that would regulate corporate acquisitions and certain
business combinations involving Texas corporations. The bill would also prohibit bidders for corporate
control from voting newly acquired control shares unless a majority of the shareholders voted to
authorize the exercise of that right. The comment suggested that such legislation might deter takeovers
that increase economic welfare and the state should not frustrate shareholders' will to transfer control
of a corporation and require them to retain managers that they wish to replace.
Commission staff commented on a proposal to expand regulation of landscape architects in the state of
Texas. The proposal would limit the practice of landscape architects primarily to persons licensed by
the board. The proposal could lead to higher prices and less consumer choice since it would inhibit entry
into the landscape design profession and restrict competition among providers of landscaping services,
the comment said.
Commission staff also commented on a bill that would prohibit certain uses of the title "interior
designer" by unlicensed persons although unlicensed individuals could perform interior design services.
The bill may increase consumer search costs by preventing unlicensed professionals from identifying
themselves by a term that consumers associate with the profession and for which no common substitute
exists.
In testimony before the Texas Senate Economic Development Committee, the Commission staff
commented on a bill that would amend the Texas Public Accountancy Act of 197 to prohibit accountants'
use of referral fees, contingent fees and commissions. Such prohibitions would be more restrictive of
competition than is reasonably necessary to protect consumers against conflict of interest. Requiring that
referral fees and commissions be disclosed is a preferable means of ensuring that consumers have
sufficient information to protect themselves against conflict of interest, the staff advised.
Commission staff commented on a Texas bill that would require car rental companies to assume all
responsibility for any damage - a proposal apparently designed to prohibit the offering of a separate
collision damage waiver charge. Such a proposal would restrict
ANNUAL REPORT 1989
95
consumer choice and result in some consumers having to bear greater costs primarily in the form of
higher base prices. Requiring disclosure of unproved information often is a preferable means to resolve
any problems of consumer confusion. The Commission staff also commented on a provision of the
proposal that would prohibit car rental companies from requiring any security or deposit for damage in,
any form. This might increase the number of instances in which car companies are unable to obtain
payment for car rentals or for acts that the renter is liable. Honest and careful drivers would then have
to bear the debts of less careful people.
Commission staff commented on a Texas Senate bill that would ban certain forms of below cost pricing.
Since distinguishing between below cost pricing and vigorous competition is difficult, statutory
prohibitions against pricing below cost can chill price competition, the comment said. The proposal
could insulate wholesale and retail marketers of tangible personal property from price competition. The
end result could be that Texas consumers would end up paying higher prices for goods.
In testimony before the Dallas City Council, the Commission staff said consumers may benefit from the
removal of the current flight restrictions on Love Field Airport because competition may be increased
by repeal and this could result in lower fares and increased convenience for consumers.
Virginia
The Commission staff said that a bill before the Virginia legislature that imposes restrictions on the sale
of pre-need funeral plans could unnecessarily reduce competition and harm consumers. Pre-need funeral
plans allow consumers to select and pay for funeral arrangements in advance. The proposal would
permit only licensed Virginia funeral directors to engage in pre-need funeral planning and prohibit
solicitation of pre-need plans through in-person communications. This prevents the introduction and
development of innovative forms of competition and lower cost alternatives for funeral products.
Washington
The Commission staff commented on a Washington state bill that would require car rental companies
to assume all responsibility for any damage - a proposal apparently designed to prohibit the
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FEDERAL TRADE COMMISSION
offering of a separate collision damage waiver charge. Such a proposal would restrict consumer choice
and result in some consumers having to bear greater costs primarily in the form of higher base prices.
Requiring disclosure of improved information often is a preferable means to resolve any problems of
consumer confusion. The Commission staff also commented on a provision of the proposal that would
prohibit car rental companies from requiring any security or deposit for damage in any form. This might
increase the number of instances in which car companies are unable to obtain payment for car rentals
or for acts that the renter is liable. Honest and careful drivers would then have to bear the debts of less
careful people.
West Virginia
The Commission staff commented on a West Virginia bill that would partially deregulate the tow
truck industry in the state. By increasing the cost of entering the tow truck business, this process
may increase the price of towing services in the state, to the detriment of consumers. This proposal,
of partially deregulating the tow truck industry, could result in significant benefits for consumers and
competition.
The Commission staff commented on a West Virginia bill that would prohibit the business of automobile
brokering. If passed, the comment said, competition ma be reduced for new and used cars and prices
may increase.
AMICUS CURIAE BRIEFS
Several amicus curiae briefs were filed by the Commission.
A brief was filed in the Sixth Circuit in Nurse Midwifery Assoc. v. Hibbett on the question of whether
a corporation controlled by competing physicians was a single entity under the Sherman Act. The
Commission supported the plaintiffs in concluding that challenged conduct of defendant State Volunteer
Mutual Insurance Company must be treated as the conduct of a single entity for antitrust purposes.
In the Second Circuit, the Commission filed an amicus curiae in S.E.C. v. Levine in which the
Commission supported the Securities and Exchange Commission. The brief stated that the lower court
was correct in determining that illegal insider-trading profits, which had been disgorged into a
receivership account following settlement
ANNUAL REPORT 1989
97
of charges that the defendants had violated the Securities and Exchange Act, could be held in
constructive trust for the benefit of injured investors, free of tax liens.
In an amicus brief to the Supreme Court in Peel v. Attorney Registration Disciplinary Commission of
Illinois on the question of whether the professional qualifications of an attorney on his business
letterhead constitute commercial speech, the Commission said the State's categorical prohibition of all
certification and specialization claims violated the standards governing regulation of commercial speech
under the First Amendment.
In an amicus to the Eleventh Circuit in Bolt v. Halifax Hospital Medical Center, the Commission stated
that the court should hold that the review afforded Florida courts for hospital privilege terminations does
not constitute "active supervision" for purposes of the state action doctrine.
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TABLE OF CASES LISTED IN APPENDICES
Matter Name
Pages
Action Credit Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Adolph Coors Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Alamo Rent-A-Car, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
American Credit Services, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
American Institute of Certified Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
American Safe Marketing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
An-Mar International Ltd., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Arkla, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Associated Mills, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Atlantic Richfield Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Aurora Discount Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Autoclave Engineers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Axiom III Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
BankCard Travel Club, et al. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Barbers Funeral Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Batesville Casket Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Bob Wright Motor Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
BOC Group, Inc., The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Body By Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Brooks Drug, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,35
Bruce Abrash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Budget Marketing, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Budget Rent-A-Car Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
California Pacific Research, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Campbell Soup Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Carl's Drug Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,35,36
Case Equipment Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Cecil B. Jacobson, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Certain Sioux Falls Obstetricians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Certified Rare Coin Galleries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Certified Security Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Chain Pharmacy Association of
New York State, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,42
Charles Revson, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Cleveland Automobile Dealer's Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,36
Coleco Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Continental Communications, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Cooper Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Cooper Rand Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Creative Advertising Specialty House, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Credit Clinic Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ANNUAL REPORT 1989
99
Credit Repair, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Credit-Rite, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
David and Annette DeFusco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Debt Collectors, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Detroit Motor Vehicle Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Dr Pepper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Dudley Hughes Funeral Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Eastside Motors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Eddy's Funeral Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Engage-A-Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Environmental Protection Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Errington Memorial Chapel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Eugene M. Addison, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Far West Auto Brokers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Federal Sterling Galleries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Fred Astaire Dance Studios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,74
General Electric Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
General Nutrition, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
General-Rent-A-Car, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Genovese Drug Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,35,37
GMJB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Goodman Buick-GMC Trucks, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Great Atlantic & Pacific Tea Company, Inc., The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Green Tree Acceptance, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Harper & Row, Publishers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Hearst Corporation, The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Heilig-Meyers Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Hensley Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,62
High Tech Advertising, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Hoechst Celanese Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Investment Development, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Iowa Chapter of American Physical
Therapy Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
James H. Turner Funeral Home, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
John Wannamaker Philadelphia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
JS&A Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
KIS Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
KKR Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,37
Koons Ford of Annapolis, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Kraft, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Kroger Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Lafarge Canada, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
L'Air Liquide S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Lee M. Mabee, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
100
FEDERAL TRADE COMMISSION
Lenox, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Lindal Cedar Homes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Liquid Air Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Lucas Funeral Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Lynn Murphy & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Macmillan, Inc., The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Magui Publishers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Medical Staff of Dickinson County
Memorial Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,37
Memphis Lamp, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
MFM Auto Sales, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
MidCon Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,70
Milcon Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Montgomery Ward & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Motor Transport Association of Connecticut, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
MTH Holdings, Enc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Mytel International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Nancy Murphy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
National Alliance of Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
National Business Consultants, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
National Indemnity Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
New England Motor Rate Bureau, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
New York State Chiropractic Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Niday Funeral Home, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
North American Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
North American Office Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
North American Philips Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Northeastern Software, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Numismatic Certification Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Nutritone, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Nutronics Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Oklahoma State Board of
Veterinary Medical Examiners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Outdoor World Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,65
Owens-Illinois, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Pacific Resources, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Panhandle Eastern Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,38
Pannos Mining Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Pantron I Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
PepsiCo, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,38
Plaza Motors, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
PPG Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,49
Promodes, S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,57
Putnam Berkley Group, Inc., The . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,44
ANNUAL REPORT 1989
101
Rainbow Enzymes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Random House, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,44
Rare Coins of Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Readers' Digest Association, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Removatron International Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Revlon, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Richard J. Wiley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
R.J. Reynolds Tobacco Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Robert G. Koski, D.O. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Robert Lewis Wilks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Ronby Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,74
Ron Price Motors, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Schering Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Sears, Roebuck and Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Security Rare Coin & Bullion Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7-Day Appraisal Services, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Seven-Up Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Sharp Electronics Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Shelly Cars Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SILO, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Simon & Schuster, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,44
Sioux Falls Obstetricians, Certain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,39
Societe Nationale Elf Aquitaine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,57
Solar Michigan, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Structural Engineers Association of
Northern California, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Sun Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,39
Swedlow, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Tengelmann Warenhandelsgellschaft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Texas Board of Chiropractic Examiners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Textron, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,57
Thermex, Inc. of Jacksonville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Ticor Title Insurance Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
TK-7 Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Traditional Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Ujena, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Uni-Vest Financial Services, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
U.S. Can Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
U.S. Consumer Promotions, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Vacation Travel Club of America, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Vaughn Management, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Wayne Pedersen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
West Point-Pepperell, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
World Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
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